The Banking Executive Magazine - January 2025

DeepSeek have been developed at a fraction of the cost compared to other major AI companies. This cost efficiency has allowed them to offer competitive solutions and challenge established players in the market. DeepSeek's "mix-of-experts" approach has pro- vided users with high-definition re- sults while reducing latency and inferencing costs. This innovative method has set them apart from con- ventional large language models. The launch of DeepSeek-R1 in Janu- ary 2025 caused a significant decline in market valuations across the AI value chain, including model devel- opers and infrastructure providers. This disruption highlights the competitive threat posed by DeepSeek to established AI compa- nies. DeepSeek's emergence has challenged assumptions about US dominance in AI and raised concerns about the market valuations of com- panies like Nvidia and Meta. The company's success has prompted a re-evaluation of the global AI land- scape. DeepSeek's ability to rival top players in the AI industry with fewer resources has positioned them as a formidable competitor. Their ap- proach has garnered attention and respect from industry experts and in- vestors alike. DeepSeek's rapid rise and innovative strategies have un- doubtedly made a significant impact on the global AI market. DEEPSEEK MARKET GROWTH DeepSeek has experienced remark- able growth in the AI market, rapidly establishing itself as a significant player. The main drivers of DeepSeek market growth are: • User Adoption: DeepSeek has seen explosive user growth, with over 10 million downloads recorded by early Jan- uary 2025. The app has become the top-rated application on both the App Store and Play Store. • Global Reach: DeepSeek has achieved impressive rankings in multiple countries, se- curing the top position in 57 coun- tries, including major markets like the United States, United King- dom, and Australia. It has also gained a strong foothold in emerg- ing markets such as India, Brazil, and Nigeria. • Cost Efficiency: DeepSeek's development cost for its third iteration (DeepSeek-V3) was around $5.5 million, signifi- cantly lower than competitors like OpenAI's GPT-4, which reportedly cost nearly $100 million to de- velop. This cost efficiency has con- tributed to its rapid adoption and market penetration. • Technological Innovation: DeepSeek's innovative approach, including its "mix-of-experts" archi- tecture, has allowed it to deliver high-performance AI models at a lower cost . • Market Impact: The launch of DeepSeek's AI mod- els has caused significant market disruptions, leading to declines in market valuations of established AI companies. Despite this, DeepSeek's success has prompted a reevaluation of the global AI landscape. DeepSeek's rapid rise and innovative ISSUE 193 JANUARY 2025 the BANKING EXECUTIVE 11