DeepSeek, a burgeoning startup from Hangzhou, China, is making waves in the artificial intelligence (AI) landscape with its innovative model that challenges the dominance of American AI giants. This 150-person company has accomplished what few thought possible, developing a model that not only rivals the best American counterparts but does so at a fraction of the cost. The company's groundbreaking pre-training phase was completed in just two months, with expenses totaling less than US$6 million. However, it is important to note that this figure only accounts for pre-training, not the overall research and development costs.
Analysts at Semianalysis have placed DeepSeek's total hardware spending well above US$500 million throughout its history. Despite this significant investment, DeepSeek's model represents a cost-effective alternative to its American peers, in part due to its access to tens of thousands of Nvidia chips. While not all these chips are at the highest specifications, they contribute to the company's efficiency, potentially lowering the barrier to entry for other companies looking to build or use AI applications.
DeepSeek's efficient model architecture has propelled the startup to the forefront of AI innovation. The company has surpassed Alibaba to claim the title of the best AI model in 2024 and has significantly closed the gap with OpenAI in the race for frontier AI models. This achievement underscores DeepSeek's potential to reshape the AI sector by providing more accessible and affordable AI solutions.
The implications of DeepSeek's advancements extend beyond China, reaching as far as Southeast Asia. Malaysia, in particular, is poised to benefit from this AI revolution. The country has already attracted billions in foreign investment from technology giants such as NTT, Nvidia, Bridge, AirTrunk, Google, and AWS. These investments are primarily concentrated in Kuala Lumpur and Johor, regions that are quickly becoming digital hubs.
Malaysian Prime Minister Anwar Ibrahim has made the digital economy a central pillar of his administration's growth strategy. With AI identified as a key priority, Malaysia's burgeoning data center market is expected to grow nearly 20 percent to US$4 billion by 2029. This growth positions Malaysia as a leader in data center capacity within the region, boasting roughly 3 gigawatts of planned and actual capacity.
DeepSeek's advancements could further fuel demand within Malaysia's digital economy. By offering AI models at a reduced cost, DeepSeek may enable more Malaysian companies to leverage AI technologies, thus accelerating innovation and economic growth. At the same time, this shift may also influence supply dynamics within the region.
"First something is expensive, then it gets cheaper" – Dario Amodei, CEO of Anthropic
Dario Amodei's observation highlights a fundamental economic principle that could play out in Malaysia's tech landscape. As AI technology becomes more affordable and accessible, Malaysia stands on the brink of a digital transformation that could reshape its economy and position it as a regional leader in AI innovation.
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