The Banking Executive Magazine - February 2025 Issue

the BANKING EXECUTIVE 50 ISSUE 193 JANUARY 2025 FinTech and AI Chornicle research papers show. The MoE technique divides an AI model into different areas of expert- ise and activates only those related to a query, as opposed to more com- mon architectures that use the entire model. MLA architecture allows a model to process different aspects of one piece of information simultaneously, help- ing it detect key details more effec- tively. While competitors like France's Mis- tral have developed models based on MoE, DeepSeek was the first firm to depend heavily on this architecture while achieving parity with more ex- pensively built models. DeepSeek's pricing was 20 to 40 times cheaper than what OpenAI charged for equivalent models, ana- lysts at Bernstein brokerage esti- mated in early February. For now, Western and Chinese tech giants have signaled plans to con- tinue heavy AI spending, but DeepSeek's success with R1 and its earlier V3 model has prompted some to alter strategies. OpenAI cut prices this month, while Google's Gemini has introduced discounted tiers of access. Since R1's launch, OpenAI has also released an O3-Mini model that relies on less computing power. Adnan Masood of U.S. tech services provider UST told Reuters that his laboratory had run benchmarks that found R1 often used three times as many tokens, or units of data processed by the AI model, for rea- soning as OpenAI's scaled-down model. STATE EMBRACE Even before R1 gripped global atten- tion, there were signs that DeepSeek had caught Beijing's favor. In Janu- ary, state media reported that Liang attended a meeting with Chinese Premier Li Qiang in Beijing as the designated representative of the AI sector, ahead of the leaders of better- known firms. The subsequent fanfare over the cost competitiveness of its models has buoyed Beijing's belief that it can out-innovate the U.S., with Chinese companies and government bodies embracing DeepSeek models at a pace that has not been offered to other firms. At least 13 Chinese city governments and 10 state-owned energy compa- nies say they have deployed DeepSeek into their systems, while tech giants Lenovo, Baidu and Ten- cent - owner of China's largest social media app WeChat - have integrated DeepSeek's models into their prod- ucts. Chinese leader Xi Jinping and Li "have signalled they endorse DeepSeek," said Alfred Wu, an ex- pert on Chinese policymaking at Sin- gapore's Lee Kuan Yew School of Public Policy. "Now everyone just endorses it." The Chinese embrace comes as gov- ernments from South Korea to Italy remove DeepSeek from national app stores, citing privacy concerns. "If DeepSeek becomes the go-to AI model across Chinese state entities, Western regulators might see this as another reason to escalate restric- tions on AI chips or software collab- orations," said Stephen Wu, an AI expert and founder of hedge fund Carthage Capital. Further limits on advanced AI chips are a challenge that Liang has ac- knowledged. "Our problem has never been fund- ing," he told Waves in July. "It's the embargo on high-end chips."