Sanctions prevented DeepSeek from shopping for the NVIDIA GPUs it wanted to coach AI fashions as highly effective as OpenAI’s ChatGPT o1 reasoning mannequin. Unable to buy the AI {hardware} it wanted, the Chinese language startup devised a distinct technique to coach the DeepSeek R1 reasoning mannequin, sending shockwaves all over the world.
DeepSeek R1 coaching prices 3% to five% of what coaching ChatGPT o1 prices. DeepSeek’s fashions are additionally cheaper to function, additional decreasing entry prices. On high of that, you may set up DeepSeek in your pc and run it regionally, as the corporate made the AI open-source. Properly, at the very least the business product, because the coaching knowledge set and directions are nonetheless secret.
These developments tanked the market, with the likes of NVIDIA being essentially the most impacted. Instantly, traders realized that AI firms like OpenAI wouldn’t essentially have to amass extra compute energy to develop higher variations of AI.
However there may be one inventory that outperformed the market, and that’s Apple. It’d look like a stunning growth contemplating how far behind Apple Intelligence seems to be to be proper now in comparison with the likes of ChatGPT o1, Operator, Gemini, and DeepSeek R1.
Nonetheless, Apple has a novel strategy to AI, and DeepSeek’s improvements may assist it ship the AI future it needs to supply iPhone customers. And I’m not suggesting Apple will incorporate DeepSeek as a substitute for ChatGPT in Apple Intelligence. As a substitute, Apple may study from DeepSeek’s improvements and replica them.
Whereas the market was in freefall on Monday, I stated the worries about NVIDIA GPU {hardware} immediately changing into out of date are ill-placed. Sure, DeepSeek may need provide you with a extra environment friendly method to practice AI to be as good and succesful as ChatGPT. However that doesn’t imply you don’t want entry to quick, dependable AI {hardware}.
The truth that DeepSeek registrations are quickly restricted, presumably as a consequence of a cyberattack, tells me that one other clarification is feasible. DeepSeek’s infrastructure is likely to be too restricted to accommodate demand. Blaming all of it on a cyberattack sounds significantly better than admitting that AI wants tons of energy to get off the bottom.
That’s all hypothesis, however time will quickly reply that thriller. Both the cyberattacks might be repelled and registrations will resume, or we’ll witness extended limitations indicative of different points.

I additionally stated on Monday that China surpassing US AI corporations is short-term. The improvements that DeepSeek launched might be replicated throughout the business. They in all probability have already got been. What occurs if an entity like OpenAI or Google adopts AI coaching much like DeepSeek? We’ll see even sooner innovation.
Once more, it’s hypothesis. However all people copies all people in tech.
So how does this profit Apple Intelligence on iPhone? Let’s begin with the fundamentals.
Keep in mind that Apple is the one tech big to have introduced a large AI mission with privateness on the core. Apple Intelligence is meant to run largely on-device. When that’s unimaginable, Apple Intelligence will transfer info to Apple’s servers in what Apple calls the Personal Cloud Compute.
Apple’s iOS 18.4 replace will ship the large Siri improve we noticed at WWDC final 12 months. Siri will have the ability to analyze extra person knowledge saved on-device to supply iPhone customers a fair higher assistant. The issue with this Siri is that it’s not a chatbot. Apple doesn’t have a ChatGPT different, so it constructed ChatGPT entry into Apple Intelligence. A Siri chatbot is probably going coming with iOS 19 subsequent 12 months.
Every time Apple is able to supply chatbots much like ChatGPT o1 and DeepSeek R1, it’ll have to search out methods to have them run on iPhones. That’s the place the DeepSeek tech may turn out to be useful, particularly the distillation course of. Ben Thompson defined all of it in a DeepSeek FAQ. It refers to utilizing a bleeding-edge AI mannequin or mannequin to coach smaller fashions:
Distillation is a method of extracting understanding from one other mannequin; you may ship inputs to the instructor mannequin and file the outputs, and use that to coach the scholar mannequin. That is the way you get fashions like GPT-4 Turbo from GPT-4. Distillation is less complicated for a corporation to do by itself fashions, as a result of they’ve full entry, however you may nonetheless do distillation in a considerably extra unwieldy means by way of API, and even, for those who get artistic, by way of chat shoppers.
Distillation clearly violates the phrases of service of varied fashions, however the one method to cease it’s to really lower off entry, by way of IP banning, charge limiting, and many others. It’s assumed to be widespread by way of mannequin coaching, and is why there are an ever-increasing variety of fashions converging on GPT-4o high quality. This doesn’t imply that we all know for a incontrovertible fact that DeepSeek distilled 4o or Claude, however frankly, it could be odd in the event that they didn’t.
Apple might use this tech to coach specialised Apple Intelligence fashions that run on iPhones. Consider a “Siri mini” AI mannequin that solely handles conversational interactions by way of textual content and voice on the iPhone. A special mini mannequin is likely to be used for different particular duties on the iPhone to make sure these duties are carried out on the iPhone.

This may make AI inference, the method of receiving a person command and offering a solution, cheaper, sooner, and extra non-public on iPhone than on different units. Thompson recognized the large winners within the wake of the DeepSeek R1 analysis, and Apple is one in all them:
Apple can also be an enormous winner. Dramatically decreased reminiscence necessities for inference make edge inference way more viable, and Apple has one of the best {hardware} for precisely that. Apple Silicon makes use of unified reminiscence, which implies that the CPU, GPU, and NPU (neural processing unit) have entry to a shared pool of reminiscence; which means that Apple’s high-end {hardware} really has one of the best shopper chip for inference (Nvidia gaming GPUs max out at 32GB of VRAM, whereas Apple’s chips go as much as 192 GB of RAM).
There’s additionally the truth that DeepSeek did what we’ve identified Apple to do for years: Optimize software program to run on extra restricted {hardware}. The iPhone by no means matched Android by way of specs, although it led the market with its high-end A-series chips. Apple optimized the iOS expertise to run on extra restricted quantities of RAM whereas delivering a quick cell expertise that didn’t affect battery life.
DeepSeek achieved one thing related in AI. It used software program optimizations to coach a ChatGPT o1 rival utilizing much less succesful AI {hardware} than OpenAI has. Everybody might be fascinated about replicating that, particularly firms with entry to the newest NVIDIA {hardware}.
Apple is probably going taking note of all of those developments, and we’d see ends in the close to future. I’m speculating, in fact, however who of their proper thoughts can ignore DeepSeek’s AI improvements proper now? Particularly if AI is on the core of all of the merchandise you make.
Lastly, I’ll additionally level out that DeepSeek made information for topping the App Retailer this week, turning the iPhone into the go-to gadget for sampling new AI improvements, even those who aren’t tied to Apple Intelligence. Additionally, in contrast to Apple Intelligence, DeepSeek works in your present iPhone, similar to the ChatGPT standalone app.