How the “DeepSeek R1” Disrupted the Tech Industry?

Introduction

“The US is great at research and innovation, especially breakthroughs, but China is better at engineering,” said Taiwanese computer scientist and businessman Kai-Fu Lee at the Asian Financial Forum in Hong Kong in early January 2025. Mr Lee’s statement comes just days before AI firm DeepSeek launched their new model ‘R1’, which has disrupted the entire tech industry in the world.

Major technology firms across the globe suffered huge losses in the stock market. DeepSeek R1 caused a seismic shift in the AI market, depleting trillions of dollars in the US alone. To better acquaint the readers with this breakthrough, let’s start from the beginning on how this AI firm managed to cause such a huge stir in the world of finance and technology.

DeepSeek is a Huangzhou-based company, and ‘DeepSeek R1’ is the AI model that caused such massive waves in the tech world. DeepSeek R1 was launched on 25th January 2025 and it immediately took the tech world by storm. In the last week of January, after the World Economic Forum in Davos, tech investors from Silicon Valley started taking interest in this model. The main reason behind their newfound trust in this AI model over the formidable and dependable US giants was the ‘price difference.’

DeepSeek developed this new AI model ‘R1’ for just a paltry sum of $5.5 million. This is in stark contrast to the billions of dollars spent to train AI models like ChatGPT and Gemini. ChatGPT is the generative AI chatbot by Open AI, whereas Gemini is a chatbot developed by Google. DeepSeek R1 is equally, if not more, efficient than all of the best AI models currently present in the market.

Providing this level of efficiency at just a fraction of the manufacturing and training cost of existing AI models has puzzled investors and technology experts, and it has generated great interest in DeepSeek R1. DeepSeek R1 is a free and open-source model, whereas the Open AI O1 Pro model costs $200. It functions better than the O1 Pro model as well as Claude Sonnet and Gemini.

As of 2025, Open AI is valued at $29 billion whereas Google’s Gemini doesn’t have a publicly stated valuation, but estimates suggest that it’s also in the billions. To have this valuation, both companies have spent billions to train the AI models and it requires a large volume of computing power, energy, and time consumption. Achieving the nearly same result by DeepSeek’s R1 model at just $.5.5 million, is fascinating subject for investors all around. If the best state-of-the-art model can operate on relatively cheap consumer hardware and is free and open-sourced, then how will tech investors ever make any money investing billions of dollars in their rival models?

In a week after its launch, DeepSeek R1 became the topmost downloaded model in Apple Inc.’s download charts. Even heavyweight investor Marc Andreessen and Meta Platform Inc. Scientist Yann LeCun praised and backed DeepSeek R1. They called it, “one of the most amazing and impressive breakthroughs.”

Ever since DeepSeek R1 became the No. 1 app in the US, it caused huge problems for other big tech firms. Simple thought – Why would people pay money to access an AI model when they can get the same results with better efficiency for free from another one? AI models require thousands of GPUs to make it fully operational, which costs an enormous amount of money. The company that provides almost all of these GPUs and enjoys a monopoly on them is Nvidia.

Jensen Huang, the co-founder of Nvidia, stated that his company enjoyed this monopoly since it has better Linux drivers than AMD, and all the machine learning algorithms are optimized for libraries like Cuda and Pytorch. These libraries are proprietary of Nvidia GPUs and can only be run by them. Nvidia also has the infrastructure to connect all the GPUs at scale.

Owing to this monopoly Nvidia has over training AI models, they enjoyed the maximum profit from tech investors pouring billions of dollars as investments. The more popular these AI models got, Nvidia’s profits increased accordingly. Hence, the launch of DeepSeek R1 for free hasn’t been more detrimental to any company than Nvidia. It wiped out a record $589 billion from Nvidia’s stock market value. The assumption that most advanced AIs will require increasing amounts of computing power and energy is what drove Nvidia shares and its supplies to an all-time high. DeepSeek changed that.

Overall, DeepSeek R1 caused a massive change and we hope to see better and bigger breakthroughs in future. What’s more fascinating is that DeepSeek was initially started as a side project of a hedge fund, and is funded by quant fund chief Liang Wenfeng. Although DeepSeek R1 avoids any answer on sensitive topics in China such as the Tiananmen Square incident, the possibility of China invading Taiwan, etc., it is still game-changing and revolutionary, to say the least.

Several news outlets are calling this launch the ‘Sputnik’ moment. While Open AI CEO Sam Altman and other tech giants have praised the emphatic launch of DeepSeek R1, what remains to be seen is how these firms overcome huge setbacks and tackle it in a better way.

Want to Become a Designer ?


Strate is a unique design school that nurtures your talents as a designer by offering state-of-the art designing courses in Bangalore.

Join Strate

Start your journey by filling the enquiry form.
Strate School of Design Strate School of Design



    Disclaimer: The information we collect about you is intended for Strate School of Design, who are responsible for its processing. You have the right to access, rectify, and delete data concerning you. You can exercise it by sending an e-mail to the following address: admission@strate.in.
    X

    Admission Open 2025-2026.

    Apply Now