Eleanor Olcott
Appearances
Today, Explained
DeepSeek deepdive
I first heard about this mysterious AI company in early 2023 because one of my contacts said that this hedge fund silently built one of the largest clusters of NVIDIA GPUs in China. So NVIDIA GPUs are graphic processing units. These are basically the AI chips that you need to power AI model training and inference. They're really, really important for this whole AI race.
Today, Explained
DeepSeek deepdive
And they're in short supply in China. So somehow this quant fund, that's a hedge fund in China, had kind of silently built one of the biggest clusters in the country. We took notice and they started publishing more and more advanced models over the past year. And their work finally pierced through the Western consciousness when we were all on Christmas holiday right at the end of 2024.
Today, Explained
DeepSeek deepdive
DeepSeek V3 is the first open source model in all of AI history that is better than the closed source models.
Today, Explained
DeepSeek deepdive
Later in January, it then published another model, which again shocked the world with its sophistication. And the key thing here is that the reason that they've prompted somewhat of an existential crisis, especially amongst the US players, is that they claim to have been doing this on such a bootstrap budget.
Today, Explained
DeepSeek deepdive
I mean, the stock market is an incredibly mysterious beast, right? I mean, we at the FT have been writing about how DeepSeek and other Chinese companies are building really competitive models. for months now. But I think what happened over the past week was we saw all of this frenzied activity on Twitter.
Today, Explained
DeepSeek deepdive
Personally, I'm staying away from DeepSeek. I don't want the Chinese spying on me and seeing what kind of videos I'm watching on TikTok. Wait. Wait. Wait. What came out on Monday was a moment, right?
Today, Explained
DeepSeek deepdive
It was really, really important because DeepSeek, this kind of little-known Chinese lab, for the first time released a paper with a very, very detailed explanation, a kind of technical recipe, as it were, for building a reasoning model. Now, reasoning models are important.
Today, Explained
DeepSeek deepdive
It's a fairly new area of AI, but it basically means models that can teach themselves and improve themselves without human supervision. And this is really important because if we can kind of use this in practical applications, it means that AI will be capable of critical thinking and will be useful in tasks that are vastly more complex than what we currently have on the market.
Today, Explained
DeepSeek deepdive
The dream, right, is to have an AI, for example, running in the background of your computer and kind of preempting your needs, like booking travel, doing things that you haven't even thought of maybe. It's kind of acting as your actual personal assistant. They don't just respond to demands. They preempt things. Hello, Noelle. What can I get for you today? They make decisions on their own.
Today, Explained
DeepSeek deepdive
They might, for example, I mean, figure out that you have not got enough groceries in your fridge and think, okay, well, we'll preemptively order that so you don't even have to do it yourself, right? I ordered extra Cheetos this week. You deserve them. It's still very much an open question as to whether or not we're going to get there. It's important to note as well that this is just like...
Today, Explained
DeepSeek deepdive
A big marketing strategy on the part of a lot of AI companies also to justify continuing to raise billions of dollars. But what I think DeepSeek proved over the past week is actually China is a viable and competitive player in this field.
Today, Explained
DeepSeek deepdive
So unlike other AI companies, AI startups in China, it hasn't raised any external financing. So you think, okay, how the hell has a company managed to build what we know is a very expensive endeavor of buying all of these GPUs and also hiring the best talent? They're known along by dance for paying the top dollar for the best AI researchers. in China.
Today, Explained
DeepSeek deepdive
And that's basically a story about the founder, Liang Wenfeng, who has a background as a quant hedge fund manager. So he basically made a whole bunch of money trading stocks and decided to plow some of those resources into this new pet project. And he started in 2021 building this large Nvidia cluster because he recognized the potential for this technology.
Today, Explained
DeepSeek deepdive
And the timing of that is important for two reasons. The first is that it was really before the world woke up to the potential of generative AI. It was before the release of ChatGVT, and the rest of the Chinese players had kind of neglected generative AI as a field of research. They were much more focused on surveillance technology, surveillance AI, because it was clear that
Today, Explained
DeepSeek deepdive
you could make money with that form of AI. The other reason it's significant is because it was really before the first tranche of kind of blanket export controls would live in place on China.
Today, Explained
DeepSeek deepdive
U.S. chip makers NVIDIA and AMD tumbling after the U.S. ramped up its chip export rules. Washington says the aim is to prevent Beijing using the most advanced semiconductors for its military modernization. So really, when the race in China in early 2023 started to replicate or seeking to replicate OpenAI's success, actually Liang and DeepSeq were in a pretty good position to get ahead.
Today, Explained
DeepSeek deepdive
That isn't the objective here. And actually, that's what makes DeepSeek so unique, right? They have not made any serious moves to commercialize their technology. They have an AI chatbot. It's free to use. What I think he's doing here, and from people who know him, is he wants to just, you know, add to the great canon of LLM research. He wants to push this technology forward.
Today, Explained
DeepSeek deepdive
And actually, also, there is a bit of a national pride here element as well, right? In interviews with domestic press, he says it's important that China also plays a role in developing this technology and being a leader. So I think there's various ambitions at play, but he's a pure technologist.
Today, Explained
DeepSeek deepdive
And actually, because DeepSeek is not interested in commercializing their technology, it's like a pure research lab. People have described it to me being like the early days of DeepMind. where you just have a bunch of engineers, a bunch of researchers working on whatever they think is the best technical pathway forward.
Today, Explained
DeepSeek deepdive
But because they don't care about commercialization, that means that they're willing to share the secrets of how they've done that with the rest of the world and kind of enable the others to also learn from their learnings. And for players like OpenAI, who are also working on the same research, but not telling the world how they got there, this is really a bit of a challenge.
Today, Explained
DeepSeek deepdive
As a journalist, I'm all for fancy metaphors and comparisons. I think the comparison is not completely correct in this case, right? Like DeepSeek is a private company that has just been plugging away on AI research. It's not building rockets to send to space. But having said that, US and China undeniably are in a tech war. We've known this since 2019.
Today, Explained
DeepSeek deepdive
And China is very, very concerned about the US getting ahead on AI. And it's been providing a huge amount of support to kind of select players that they think are going to help it remain competitive and gain an edge. But really, the Sputnik element, it's really about the hardware itself, the AI chips.
Today, Explained
DeepSeek deepdive
I think the kind of real race here is on Chinese companies and the Chinese ecosystem overall trying to make Huawei or maybe one of the other Chinese competitors a true long-term and successful rival to NVIDIA.