Chinese startup DeepSeek released a new artificial intelligence model with “drastically reduced” costs on Friday, more than a year after it stunned the world with a low-cost reasoning model that matched the capabilities of US rivals.

The AI race has intensified the rivalry between China and the United States, and the White House on Thursday accused Chinese entities of a massive effort to steal artificial intelligence technology.

Hangzhou-based DeepSeek burst onto the scene in January last year with a generative AI chatbot, powered by its R1 reasoning model, that upended assumptions of US dominance in the strategic sector.

The new version, DeepSeek-V4, “features an ultra-long context of one million words”, the company said in a statement on social media platform WeChat, hailing it as “world-leading… with drastically reduced compute (and) memory costs” in a separate announcement on X.

The model’s context length, which determines how much input a model is able to absorb to help it complete tasks, “(achieves) leadership in both domestic and open-source fields across agent capabilities, world knowledge, and reasoning performance”, the WeChat statement said.

A “preview version” of the open source model is now available, the company said.

Experts say V4’s release marks an “inflection point” in terms of hardware and cost.

“This addresses the long-standing issues of slower performance and higher costs associated with long context lengths, marking a genuine inflection point for the industry,” Zhang Yi, the founder of tech research firm iiMedia, told AFP.

“For end users, this will bring widespread, accessible benefits. For instance, if ultra-long context support becomes a standard feature, long-text processing is expected to move beyond high-end research labs and enter mainstream commercial applications,” he said.

The new V4 is released as two versions, DeepSeek-V4-Pro and DeepSeek-V4-Flash, with the latter being “a more efficient and economical choice” because it has smaller parameters.

‘Sputnik moment’

V4-Pro has 1.6 trillion parameters while the V4-Flash has 284 billion parameters, which refine models’ decision-making ability.

The model has also been “optimised” for popular AI Agent products such as Claude Code, OpenClaw, OpenCode, and CodeBuddy, the DeepSeek statement said.

“In world knowledge benchmarks, DeepSeek-V4-Pro significantly leads other open-source models and is only slightly outperformed by the top-tier closed-source model, (Google’s) Gemini-Pro-3.1,” the statement added.

Last year’s so-called “DeepSeek shock” sparked a sell-off of AI-related shares and a reckoning on business strategy in what was also described as a “Sputnik moment” for the industry.

The chatbot performed at a similar level to ChatGPT and other top American offerings, but the company said it had taken significantly less computing power to develop.

However, its sudden popularity raised questions over data privacy and censorship, with the chatbot often refusing to answer questions on sensitive topics such as the 1989 Tiananmen crackdown.

At home, DeepSeek’s AI tools have been widely adopted by Chinese municipalities and healthcare institutions as well as the financial sector and other businesses.

This has been partly driven by DeepSeek’s decision to make its systems open source, with their inner workings public — in contrast to the proprietary models sold by OpenAI and other Western rivals.

But the White House has accused Chinese firms of vying to “steal” American technology, ahead of an expected summit between Donald Trump and Xi Jinping in Beijing next month.

“The US has evidence that foreign entities, primarily in China, are running industrial-scale distillation campaigns to steal American AI,” Trump’s science and technology chief advisor Michael Kratsios said in a post on X.

Distillation is a common practice within AI development, often used by companies to create cheaper, smaller versions of their own models.

DeepSeek’s Friday announcement also came as Meta said it planned to cut a tenth of its staff as it looks for productivity gains from the rest of the workforce while investing heavily in artificial intelligence. Reports said Microsoft was also looking to trim its ranks.