For Southeast Asia, this presents opportunities to develop consumer-based AI applications with business models lean enough to find traction in the region.

What does Deepseek’s r1 model mean for Southeast Asia AI?

For Southeast Asia, this presents opportunities to develop consumer-based AI applications with business models lean enough to find traction in the region.

Ahead of Chinese New Year, Chinese AI company Deepseek’s r1 model announcement has rocked big tech in the US and Wall Street, even impacting Japan’s chip stocks.

While not entirely a new development, with Deepseek having already announced several launches towards the end of last year, what is more significant is the market’s perception of this development relative to other market leaders in the space (a perception that was quickly validated by the stock market rout).

While the announcement and the subsequent market reaction has overtaken the headlines with “shock”, the entry of open source competition and resources in software is ultimately inevitable and a pattern we have seen across tech, from mobile app development to ecommerce to social media.

In some ways, while market share can be eaten up in terms of end consumer users, the re-standardization of pricing in a market actually benefits most US big tech players in the long run. For the longest time they have been shouldering most of the costs in this AI arms race, and now it can far cheaper for them to run models on their platforms, devices, and memory chips.

Beyond the competition and our foray into a world of zero-cost inference, what is also more important to take away is why and how the R1 model came about:

(1) R1 likely being developed via distillation (AI models being used to train newer AI models) puts model development in a trajectory where there is increasingly less of a human factor in the training process (i.e., true reinforcement learning) –> how will this progression of AI output impact our own view of reality down the line?

(2) R1 being open source is an important feature for talent development. While its peers eventually shifted to model use monetization, Deepseek sticking to its guns on open source will be key in setting industry practice and business models moving forward –> what will new waves of AI talent be focusing on?

For Southeast Asia, this presents opportunities to develop consumer-based applications with business models lean enough to find traction in the region (once considered to be too costly).

Lower costs on data centers and GPUs can mean greater investments into such infrastructure in the region. This could also flatten the world of AI from Silicon Valley, where much of the capital has concentrated in the last year.

That said, while this opens up the industry to more application-based business models, there is still the question of the cybersecurity and data privacy premium for enterprise use cases.

This puts AI transformation enablers for enterprise like fileAI and WIZ.AI in a better position to also lower the costs of developing AI-driven workflows and systems while still meeting the needs of businesses

Find out how they are doing that in our upcoming AI Transformation event along with NetSuite. Sign up here!

+ posts

Paulo Joquiño is a writer and content producer for tech companies, and co-author of the book Navigating ASEANnovation. He is currently Editor of Insignia Business Review, the official publication of Insignia Ventures Partners, and senior content strategist for the venture capital firm, where he started right after graduation. As a university student, he took up multiple work opportunities in content and marketing for startups in Asia. These included interning as an associate at G3 Partners, a Seoul-based marketing agency for tech startups, running tech community engagements at coworking space and business community, ASPACE Philippines, and interning at workspace marketplace FlySpaces. He graduated with a BS Management Engineering at Ateneo de Manila University in 2019.

***