Inside High-Flyer, the AI hedge fund behind China’s DeepSeek

China’s quantitative hedge fund High-Flyer has pivoted from AI-powered investing to developing cutting-edge artificial general intelligence (AGI) through its DeepSeek venture, which has gained recognition from Silicon Valley competitors.

Strategic pivot and core mission: High-Flyer, a $13.79 billion AI-powered hedge fund, announced in 2023 that it would redirect its resources toward developing artificial general intelligence through its DeepSeek research group.

• The company’s official announcement emphasized its commitment to developing AI technology that benefits humanity
• DeepSeek’s sophisticated AI models have garnered praise from Silicon Valley competitors, marking a first for a Chinese AI model
• The venture’s claims about efficient computing power usage triggered a global tech sector selloff

Leadership and infrastructure: High-Flyer’s founder Liang Wenfeng leads DeepSeek and has invested heavily in computing infrastructure critical for AI development.

• The fund built two AI supercomputing clusters using Nvidia A100 chips before U.S. export restrictions
• The first cluster, completed in 2020, cost 200 million yuan and contained 1,100 A100 chips
• A second, larger cluster with approximately 10,000 A100 chips was completed in 2021 at a cost of 1 billion yuan

Technical capabilities and controversy: DeepSeek’s computational resources and capabilities have become a subject of industry speculation and debate.

• DeepSeek claims to use only newer Nvidia H800 and H20 chips for its latest models
• Scale AI CEO Alexandr Wang alleged DeepSeek possesses 50,000 undisclosed Nvidia H100 chips, which would violate U.S. export controls
• The company’s DeepSeek-V2 model sparked an AI price war in China upon its release in May

Resource challenges: Computing power access, rather than funding, represents the primary obstacle for DeepSeek’s development.

• Liang acknowledged that U.S. restrictions on high-end chips, not capital, pose the main challenge
• The company maintains no immediate plans for fundraising or going public
• High-Flyer and DeepSeek share office space and patent ownership related to AI model training infrastructure

Looking ahead: While DeepSeek’s rapid emergence has captured industry attention, questions remain about its true computing capabilities and the impact of U.S. export controls on its ability to advance toward AGI development.