The emergence of DeepSeek, a Chinese AI startup that has upended the global AI market with its groundbreaking R1 model, presents a unique opportunity for New Zealand to leverage advanced AI technology while accelerating its own innovation ecosystem. DeepSeek’s advancements, marked by dramatically reduced costs and high performance, could pave the way for economic growth, technological progress, and societal transformation in the country.
DeepSeek’s Disruption
DeepSeek’s R1 model, a cost-efficient large language model (LLM) outperforming established players like OpenAI’s ChatGPT, has shocked the global AI industry. By utilising algorithmic innovation rather than high-cost hardware, DeepSeek reduced training costs to just $5.6 million USD—compared to the billions required by Western AI giants. This efficiency opens new doors for countries like New Zealand, where resource constraints have limited AI development.
Albert Bifet, founding director of the University of Waikato’s Artificial Intelligence Institute, noted that DeepSeek’s model demonstrates how “cheap artificial intelligence models can now compete with expensive ones,” levelling the playing field for smaller nations. With reduced financial barriers, New Zealand businesses and institutions can adopt cutting-edge AI more broadly and cost-effectively.
Boosting AI Adoption Across Sectors
DeepSeek’s low-cost AI could be a game-changer for New Zealand businesses, especially small and medium enterprises (SMEs), which often face prohibitive costs when integrating advanced AI solutions. Sectors such as agriculture, logistics, retail, and healthcare could reap immediate benefits.
For instance, in agriculture, where New Zealand is a global leader, DeepSeek’s accessible AI could optimise supply chains, enhance yield predictions, and improve sustainability practices. In manufacturing, AI adoption could drive productivity gains by automating processes and improving efficiency.
This potential aligns with government projections that AI could contribute $76 billion NZD to the nation’s GDP by 2038, with a forecasted 15% productivity boost across industries. As Bifet explains, “Once expensive resources are not needed, any small country can participate.”
Economic Diversification and Global Competitiveness
New Zealand has long relied on agriculture and tourism as economic mainstays. DeepSeek’s disruption offers an opportunity to diversify into AI-driven industries, reducing economic vulnerability. By developing AI tools, machine learning applications, and AI-as-a-service exports, New Zealand could position itself as a hub for innovative technologies.
DeepSeek’s open-source model design further facilitates this transition, enabling local tech companies and universities to explore customised AI solutions without excessive costs. Alyona Medelyan, CEO of Thematic, highlighted the importance of investing in AI talent and infrastructure, urging that New Zealand “needs to be in the race” to remain competitive globally.
Moreover, AI technologies can help New Zealand overcome its geographic isolation by enabling local businesses to scale globally through digital tools and AI-driven solutions.
Challenges and Geopolitical Risks
While DeepSeek’s model presents opportunities, its Chinese origin raises questions about data privacy and geopolitical considerations. New Zealand has previously taken a cautious stance on foreign technology, exemplified by its ban on Huawei equipment in 5G networks.
Deploying DeepSeek’s software may invite scrutiny from regulatory bodies due to concerns over national security. Organisations like Lumen, a New Zealand firm planning to integrate DeepSeek’s technology, are already preparing for possible government restrictions. Balancing the potential for innovation with the need for compliance and security will be critical.
Strengthening Local AI Capabilities
To maximise the benefits of AI, New Zealand must focus on attracting and retaining talent while fostering collaboration between universities, industry, and government. DeepSeek’s disruptive technology underscores the importance of such cooperation.
Existing initiatives like the AI Activator and the recently launched GovGPT pilot provide a strong foundation for AI adoption. The AI Activator connects businesses with AI research experts, tools, and funding opportunities. At the same time, GovGPT demonstrates how AI can improve public services by offering citizens faster, more reliable access to government resources.
Still, experts like Medelyan argue that bolder action is needed. Increased investment in AI research and education, including directing universities to prioritise AI-related fields, could accelerate New Zealand’s progress.
A Vision for the Future
DeepSeek’s advancements challenge traditional cost structures in the AI industry and offer a pathway for smaller nations like New Zealand to thrive in the AI revolution. By capitalising on these opportunities, New Zealand could strengthen its economy, enhance global competitiveness, and build a resilient, diversified technological sector.
However, realising this vision will require a coordinated effort involving government support, private-sector innovation, and public-private partnerships. As Rush Digital CTO Danu Abeysuriya aptly put it, “You’ve got to be in the race.”