High-Flyer Capital Management, a Chinese hedge fund turned AI pioneer, challenges tech giants with its innovative DeepSeek-V2 model that sparks an AI price war in China.
High-Flyer Capital Management: From Quant Fund to AI Pioneer
High-Flyer Capital Management, a Chinese quantitative hedge fund founded in 2015, has grown into an RMB 60 billion ($8 billion) asset manager by leveraging AI and algorithms for stock price predictions. Recently, it transitioned to AI development, launching DeepSeek-V2, a powerful AI model in May 2023. DeepSeek-V2 can answer questions, write code, and reason, priced at RMB 2 per million output tokens, significantly cheaper than its competitors. This precipitated a price war among Chinese AI providers, with companies like ByteDance, Alibaba, and Baidu drastically cutting their AI prices.
The AI landscape in China is highly competitive, with firms like High-Flyer posing challenges to established tech giants. Liu Qingfeng of iFlytek asserts that Chinese AI models are competitive with their Western counterparts. High-Flyer’s success is partly fueled by its hedge fund, which has achieved a 151% return since 2017.
Founded by Liang Wenfeng, a computer science graduate from Zhejiang University, High-Flyer started in a Chengdu apartment. By 2021, the firm fully integrated AI into its strategies, investing significantly in AI infrastructure, including two supercomputing clusters.
DeepSeek-V2, which ranks among the top 10 large language models worldwide according to the University of Waterloo, is open source. It uses a unique “mixture of experts” architecture, splitting tasks into smaller chunks for efficiency. Despite its competitive pricing, some experts question the long-term sustainability of these low prices.
With ambitions for artificial general intelligence (AGI), High-Flyer continues to invest in computational power and AI infrastructure, positioning itself as a significant player in the global AI race.
