Why DeepSeek’s sequel failed to impress

The AI lab faces stiffening competition and a meddling state

A little More than a year ago a small Chinese artificial-intelligence startup shocked the world. When DeepSeek unveiled a pair of models that performed nearly as well as the best Western ones, but were built for a fraction of the cost, a panic swiftly followed. The share prices of Nvidia and other providers of AI infrastructure briefly tumbled as investors fretted (wrongly, it turned out) that demand for their wares would slow in the face of such a leap in the efficiency of model-making. Yet the release on April 24th of the lab’s new model, called v4, has been greeted with a shrug. Why?

DeepSeek’s latest release hits many of the same heights its predecessor did. According to tests run by the company, the performance of its most powerful “Pro” system falls only marginally short of the models put out by leading American competitors three to six months ago. DeepSeek’s v4 is cheap for customers, too. An introductory offer makes it a thousandth of the price of the best American models for some uses. Even after that rate expires on May 7th, v4 will cost between a tenth and a quarter of American equivalents.

But it seems that, unlike DeepSeek’s previous blockbuster, v4 was not particularly cheap to build. In 2025 the lab eagerly pointed out that the cost of training its AI was about $6m, far below the going rate in the West. The lab’s technical white paper on v4, however, omits any estimate of this measure. The fact that 16 months elapsed between v4 and its predecessor also hints that oodles of processing power were used to train it.

The release comes at a time when China’s AI scene is increasingly crowded. DeepSeek has faced growing competition both from other independent labs, such as Moonshot and Z.ai, and the country’s internet giants. The Qwen family of models produced by Alibaba, an e-commerce colossus, has sat comfortably atop China’s leader-board for most of the past year. ByteDance, creator of TikTok, is also the maker of Doubao, China’s most popular chatbot. Dola, as it is called outside China, is hugely popular in Mexico, the Philippines and Britain, where it ranks above Google’s Gemini in Apple’s app store.

In China, much of the attention has shifted to the apps built on top of AI. Alibaba puts its Qwen model to use elsewhere in its business, offering a “digital workforce” to merchants using its e-commerce platform, for example. The country’s internet giants are now racing to build AI-powered “super apps” that can facilitate a wide range of digital transactions. Clever models alone are not seen as the way to make money from the technology.

At the same time, DeepSeek has had to contend with greater state meddling at home. China’s government has been promoting chips made by Huawei, the national semiconductor champion. DeepSeek reportedly tried to train its new model on them, but eventually fell back on Nvidia’s chips instead, adding cost and time. The government seems unlikely to give local AI companies a freer hand soon: on April 27th it said that it would block the acquisition of Manus, another of the country’s AI darlings, by Meta, an American social-media giant. The startup’s co-founders have been barred from leaving China since March.

That DeepSeek’s latest release has failed to dazzle is no cause for lament. Anthropic, an American lab, recently judged its leading-edge Mythos model to be too powerful for widespread release owing to its hacking capabilities. The documents accompanying DeepSeek’s v4, by contrast, do not mention safeguards at all. If Chinese labs do catch up to their American equivalents, they may not show the same restraint. ■