Among the industry buzz created by DeepSeek’s rise to prominence, one question looms large: what does this mean for the strategy of the third leading global nation for AI development – the United Kingdom?

The generative AI era was kickstarted by the release of ChatGPT on November 30 2022, when large language models (LLMs) entered mainstream consciousness and began reshaping industries and workflows, while everyday users explored new ways to write, brainstorm, search and code. We are now witnessing the “DeepSeek moment” – a pivotal shift that demonstrates the viability of a more efficient and cost-effective approach for AI development.

DeepSeek isn’t just another AI tool. Unlike ChatGPT and other major LLMs developed by tech giants and AI startups in the USA and Europe, DeepSeek represents a significant evolution in the way AI models are developed and trained.

Most existing approaches rely on large-scale computing power and datasets (used to “train” or improve the AI systems), limiting development to very few extremely wealthy market players. DeepSeek not only demonstrates a significantly cheaper and more efficient way of training AI models, its open-source “MIT” licence (after the Massachusetts Institute of Technology where it was developed) allows users to deploy and develop the tool.

This helps democratise AI, taking up the mantle from US company OpenAI – whose initial mission was “to build artificial general intelligence (AGI) that is safe and benefits all of humanity” – enabling smaller players to enter the space and innovate.

By making cutting-edge AI development accessible and affordable to all, DeepSeek has reshaped the competitive landscape, allowing innovation to flourish beyond the confines of large, resource-rich organisations and countries.

It has also set a new benchmark for efficiency in its approach, by training its model at a fraction of the cost, and matching – even surpassing – the performance of most existing LLMs. By employing innovative algorithms and architectures, it is delivering superior results with significantly lower computational demands and environmental impact.

Why DeepSeek matters

DeepSeek was conceived by a group of quantitative trading experts in China. This
unconventional origin holds lessons for the UK and US.

While the UK – particularly London – has long attracted scientific and technological excellence, many of the highest achieving young graduates have tended to disproportionately opt for careers in finance, something that has come the expense of innovation in other critical sectors such as AI. Diversifying the pathways for Stem (science, technology, engineering and maths) professionals could yield transformative outcomes.

The UK government’s recent and much-publicised 50-point action plan on AI offers glimpses of progressive intent, but also displayed a lack of boldness to drive real change. Incremental steps are not sufficient in such a fast-moving environment. The UK needs a new plan – one that leverages its unique strengths while addressing systemic weaknesses.

Firstly, it’s important to recognise that the UK’s comparative advantage lies in its leading interdisciplinary expertise. World-class universities, thriving fintech and dynamic professional services and creative sectors offer fertile ground for AI applications that extend beyond traditional tech silos. The intersection of AI with finance, law, creative industries and medicine presents opportunities to lead in some niche but high-impact areas.

The UK’s funding and regulatory frameworks are due an overhaul. DeepSeek’s development underscores the importance of agile, well-funded ecosystems that can support big, ambitious “moonshot” projects. Current UK funding mechanisms are bureaucratic and fragmented, favouring incremental innovations over radical breakthroughs, at times stifling innovation rather than nurturing it. Simplifying grant applications and offering targeted tax incentives for AI startups would represent a healthy start.

Finally, it will be critical for the UK to keep its talent in the country. The UK’s AI sector faces a brain drain as top talent gravitates toward better-funded opportunities in the US and China. Initiatives such as public-private partnerships for AI research development can help anchor talent at home.

DeepSeek’s rise is an excellent example of strategic foresight and execution. It doesn’t merely aim to improve existing models, but redefines the very boundaries of how AI could be developed and deployed – while demonstrating efficient, cost-effective approaches that can yield astounding results. The UK should adopt a similarly ambitious mindset, focusing on areas where it can set global standards rather than playing catch-up.

AI’s geopolitics cannot be ignored either. As the US and China compete with one another, the UK has a critical role to play as the trusted intermediary and ethical leader in AI governance. By championing transparent AI standards and fostering international collaboration, the UK can punch above its weight on the global stage.

DeepSeek’s success should serve as a wake-up call. Britain has the talent, institutions and entrepreneurial spirit to be a significant leading player in AI – but it must act decisively, and now.

It is time to remove token gestures and embrace bold strategies that move the needle and position the UK as a leader in an AI-driven future. This moment calls for action, not just more conversation.

DeepSeek has raised the bar. It is now up to the UK to meet it.

Author: Feng Li, Chair of Information Management, Associate Dean for Research & Innovation, Bayes Business School, City St George’s, University of London

This article is republished from The Conversation under a Creative Commons license.