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“DeepSeek has taken the market by storm by doing more with less,” said Giuseppe Sette (co-founder and president of Toggle AI)

Why did he say that? Let’s find out. DeepSeek is a brand-new AI system created in just a few months with a $6 million budget, rivaling ChatGPT, which was backed by a whopping $100 million. Sounds impossible, right? But DeepSeek made it a reality. 

In January 2025, it launched a groundbreaking AI model that has the tech world buzzing—taking the market by storm while operating with significantly less powerful hardware due to US sanctions. 

It might sound like any story of doing more with less but trust it goes deeper. It’s the proof and ingenuity of the team working behind it. So, are you excited to get into the secrets no one revealed about how Deepseek changed the script of the AI industry? 

What is DeepSeek?

DeepSeek is a Chinese startup established in 2023 and one of the most spoken names in this space. DeepSeek model R1 has advanced emotional intelligence capabilities, making it uncompareable to other AI models. It can differentiate between emotional cues and tones. Moreover, operating in an environment where the latest AI hardware, like Nvidia’s top-of-the-line H100 GPUs, are out of bounds. DeepSeek has developed an AI model called DeepSeek-V3, which has 671 billion parameters. This puts it at the scale of some of the largest AI systems worldwide. 

Here is the catch: DeepSeek was not built using super-expensive hardware to train its AI. Instead, it used downgraded H800/A800 chips. Which are not powerful and in all likelihood. Still, this team outperformed expectations through innovative techniques. And efficient approaches to developing their model.

However, it’s not just the technical side of things that many are talking about in this case. DeepSeek uniquely positions itself in global markets. It’s more affordable and accessible than some of the most powerful AI models on the market today.

How DeepSeek Hit the Tech World Like a Tsunami

When DeepSeek dropped its latest model in January 2025, the reaction was immediate and seismic. The news did not just make a splash. It created a massive technological earthquake that shook the foundations of the world’s technology markets. It caused a 17 percent dip in making up to $600 Billion worth of Nvidia’s stock price in pre-market trading.

Why? Because DeepSeek had pulled off what many considered impossible. It created an advanced AI system with lower costs and less powerful hardware. In the AI world, where the competition is fierce, this wasn’t just a minor achievement but a game-changing moment.

A fun fact: DeepSeek’s model costs 1/30th of OpenAI’s pricing with just $0.48 per million output tokens compared to OpenAI’s $3 to $15. It makes cutting-edge AI accessible to a wider range of businesses and developers. While companies like OpenAI charge a premium. But again, it is not just about the price, as DeepSeek AI delivers results.

The Techniques That Made DeepSeek Possible

Now that you understand how DeepSeek caused waves let’s focus on the techniques they used to develop their breakthrough AI model. It comes down to smart engineering and efficient use of their resources. These are game-changing strategies that DeepSeek has employed:

• Reinforcement Learning (RL)

DeepSeek’s strength was its ability to leverage reinforcement learning during its training model. Reinforcement learning is a learning process in which an AI system is rewarded for making a correct decision. And given corrective feedback for taking the wrong action. With repeated processes, the AI learns to optimize its decisions and performance.

What is significant here is that DeepSeek applied reinforcement learning in a fashion that maximizes efficiency. It allowed this AI to make rapid evolution and not require big computational resources. This constant iterated learning helped DeepSeek’s model further improve. And continue to adapt while new data streams come in.

• Distillation

DeepSeek has a great innovation of simplification and efficiency. They took what is normally presented as complex into a simpler version. It uses fewer computational powers while accomplishing a much similar output within the larger parent model. As such, less power-consuming it is also easier to handle such a version instead of using full-scale, heavier versions for its adaptation to tasks differently. By focusing on being as efficient as possible, DeepSeek was able to keep costs down while still delivering high-quality results.

• Pre and Post Training

DeepSeek didn’t just build a model and sit on it. It used pre-training to prepare the model with large datasets before fine-tuning it, then used post-training further to tweak the system for the best possible performance. It meant the AI was not just capable but smart, versatile, and would survive in real-world applications.

These techniques allowed DeepSeek to optimize performance and keep costs down, all while creating an AI that delivers results on par with more expensive models.

Why Is DeepSeek in the Limelight?

DeepSeek’s swift rise to fame isn’t just a tale of technological victory—it’s strategic success. Given that it is operating from fewer resources and limited access to trade through the United States, DeepSeek has learned to use its liabilities in beneficial ways to create a cost-effective AI system that is also high-performing.

Unlike other companies that are just bent on brute force and the very best hardware to be had, DeepSeek is a company that focuses entirely on optimization and efficiency. And, this really paid in spades because by having less expensive hardware and more efficient training techniques applied, DeepSeek has shown everyone that you don’t need expensive tech to create something worthwhile. And the world took notice.

How Did the Compute Gap Between the U.S. and China Affect the Model?

A huge part of DeepSeek’s story begins with this compute gap between China and the U.S. American companies. The American companies used top-of-the-line hardware (Nvidia H100 chips), whereas DeepSeek’s chips were from a lower tier because of export controls. But that didn’t become the stone of the way of DeepSeek, they still built something that worked great and produced state-of-the-art results.

This change in thought has again brought questions regarding the future of AI hardware development. With DeepSeek doing so much with less, how many other companies will follow that route? Does this change the way AI models will be trained and deployed, particularly in countries where expensive hardware is not easily available?

What is clear is that DeepSeek’s innovative approach to AI development shapes the conversation around AI development. They showed how lean and efficient creation is not just a matter of raw power but about the smartness that involves using the power you have.

What Impact Did DeepSeek Leave on Nvidia and Other Tech Companies?

When the success of DeepSeek started emerging, it affected Nvidia and other technological companies. Its sharp decline in stocks following the breakthrough of DeepSeek has been said to indicate competition in the AI space is getting more intense. Shows that innovative AI models do not necessarily have to come from bigger and more powerful systems but from efficient smaller-scale approaches.

The success of DeepSeek also carried a broader message: don’t underestimate what can be accomplished with creative engineering. As companies like DeepSeek prove, there is still much room for disruption in AI, even in industries where large players have dominated for years.

Limitations of the Model

Despite DeepSeek’s applause-worthy accomplishments, the model has a few limitations. The most significant is that, it only supports English and Chinese. This limits the access of the model globally. However, considering the size of the Chinese market and the increasing prominence of the English-speaking world, this might not be of concern in the short term.

However, the censorship factor might be what defines it as its biggest limitation. The models are created in a way that avoids criticizing the Chinese Communist Party. This gives DeepSeek a big challenge if it is to reach the global platform because several countries will oppose this due to their sense of freedom of speech and ethical concerns, especially the West.

Conclusion

DeepSeek demonstrated that AI innovation may come from any source—and the rules are evolving. They have given the world the power to create a competitive model with fewer resources. It does not have to be the argument of the rich and mighty to call AI. DeepSeek has broken these rules with its first-class techniques and low-cost approach, showing there is still room for the underdog to rise to the top.

No one knows what DeepSeek will do next, but if you’re ready to take the power of innovation into your business, American Web Designers is here to help. We bring the future of technology right to your doorstep.