DeepSeek Accelerates AI Model Timeline as Market Reacts To Low-Cost Breakthrough

Chinese AI startup DeepSeek is speeding up the release of its R2 model following the success of January's R1, which outperformed many US competitors at a fraction of the cost and triggered a $1 trillion-plus market selloff. The Hangzhou-based firm had planned a May release but now wants R2 out 'as early as possible,' Reuters reported Tuesday.

The upcoming model promises improved coding capabilities and reasoning in multiple languages beyond English. DeepSeek's competitive advantage stems from its parent company High-Flyer's early investment in computing power, including two supercomputing clusters acquired before U.S. export bans on advanced Nvidia chips. The second cluster, Fire-Flyer II, comprised approximately 10,000 Nvidia A100 chips. DeepSeek's cost-efficiency comes from innovative architecture choices like Mixture-of-Experts (MoE) and multihead latent attention (MLA).

According to Bernstein analysts, DeepSeek's pricing was 20-40 times cheaper than OpenAI's equivalent models. The competitive pressure has already forced OpenAI to cut prices and release a scaled-down model, while Google's Gemini has introduced discounted access tiers.

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