Chinese artificial intelligence start-up DeepSeek is choosing to focus on research rather than revenue.
The Chinese company has seen increased demand for its services through both its free website, app, and from paying business customers. Last month, for the first time, revenues were sufficient to cover ongoing costs, reports the Financial Times based on two sources with knowledge of the developments.
DeepSeek popular in healthcare
Interest in DeepSeek grew after the introduction of its cost-effective R1 reasoning model. This model performs similarly to U.S. and Chinese competitors but was developed with a much smaller budget. Customers, mainly from sectors such as healthcare and finance, purchased API access to DeepSeek’s R1 and V3 models. However, demand was so high that the startup had to temporarily suspend these services due to a lack of funds.
According to industry experts, the CEO has shown little intention to leverage DeepSeek’s sudden fame to further commercialize the technology in the short term. The company is focusing most of its resources on developing AI models and the search for artificial general intelligence (AGI) – machines with human-like cognitive abilities.
These sources added that the financially independent founder is also not responding to interest from large Chinese technology companies or venture capital and sovereign wealth funds to invest in the company.
Apple chose Alibaba
His lack of commercial ambition has allowed large technology companies such as Alibaba and Tencent to win over business customers in China with their more mature infrastructure and services. This raises questions about the sustainability of DeepSeek’s revenue streams, the Financial Times argues. Apple, for example, chose Alibaba’s Qwen instead of DeepSeek to introduce AI features on iPhones in China later this year.
According to another source, Tencent has seen a surge in API sales since it began embracing DeepSeek’s open-source models. About half of its cloud customers, mostly from the government and financial sectors, have tested DeepSeek’s models. 20% of them have asked to have their versions customized with Tencent’s support.
Access to Chinese state data centers
DeepSeek has won support from the Chinese government, which is counting on AI to drive economic growth, according to the Financial Times. The startup gained access to state-funded data centers, easing restrictions on computing power.
In the long run, limited access to Nvidia’s new generation of advanced chips could be a bottleneck, and insiders suggest that DeepSeek should consider future partnerships to solve this problem. The company may have to accept state funds at some point anyway to win further political support.
Engineers at DeepSeek are currently working rapidly on the release of the R2 and V4 models. These were initially scheduled for May, but the launch may be brought forward to maintain the momentum built up, a source said.