The situation is further complicated by the US export controls on advanced semiconductors. High-Flyer’s decision to venture into AI is directly related to these constraints, however. Long before the anticipated sanctions, Liang acquired a substantial stockpile of Nvidia A100 chips, a type now banned from export to China. The Chinese media outlet 36Kr estimates that the company has over 10,000 units in stock, but Dylan Patel, founder of the AI research consultancy SemiAnalysis, estimates that it has at least 50,000. Recognizing the potential of this stockpile for AI training is what led Liang to establish DeepSeek, which was able to use them in combination with the lower-power chips to develop its models.
A new kid on the block
Tech giants like Alibaba and ByteDance, as well as a handful of startups with deep-pocketed investors, dominate the Chinese AI space, making it challenging for small or medium-sized enterprises to compete. A company like DeepSeek, which has no plans to raise funds, is rare.
Zihan Wang, the former DeepSeek employee, told MIT Technology Review that he had access to abundant computing resources and was given freedom to experiment when working at DeepSeek, “a luxury that few fresh graduates would get at any company.”
In an interview with the Chinese media outlet 36Kr in July 2024 Liang said that an additional challenge Chinese companies face on top of chip sanctions, is that their AI engineering techniques tend to be less efficient. “We [most Chinese companies] have to consume twice the computing power to achieve the same results. Combined with data efficiency gaps, this could mean needing up to four times more computing power. Our goal is to continuously close these gaps,” he said.
But DeepSeek found ways to reduce memory usage and speed up calculation without significantly sacrificing accuracy. “The team loves turning a hardware challenge into an opportunity for innovation,” says Wang.
Liang himself remains deeply involved in DeepSeek’s research process, running experiments alongside his team. “The whole team shares a collaborative culture and dedication to hardcore research,” Wang says.
Open to all
As well as prioritizing efficiency, Chinese companies are increasingly embracing open-source principles. Alibaba Cloud has released over 100 new open-source AI models, supporting 29 languages and catering to various applications, including coding and mathematics. Similarly, startups like Minimax and 01.AI have open-sourced their models.
According to a white paper released last year by the China Academy of Information and Communications Technology, a state-affiliated research institute, the number of AI large language models worldwide has reached 1,328, with 36% originating in China. This positions China as the second-largest contributor to AI, behind the United States.