Chinese AI startup DeepSeek continues to disrupt the global artificial intelligence landscape with its latest innovation in model optimization. On May 29, the company revealed that a variant of its recently updated R1-0528 reasoning model was used to enhance Alibaba's Qwen 3 8B Base model through a process known as distillation.
The distillation technique, which transfers knowledge from a more sophisticated model to a smaller one, allowed DeepSeek to impart the reasoning processes from its R1-0528 model to Alibaba's system. According to DeepSeek's announcement, this process resulted in performance improvements exceeding 10% for the Qwen 3 model.
"We believe that the chain-of-thought from DeepSeek-R1-0528 will hold significant importance for both academic research and practical applications," DeepSeek stated in its announcement. The company has previously released several distilled models based on both Qwen and Meta's Llama architectures, with sizes ranging from 1.5B to 70B parameters.
DeepSeek's approach to AI development has garnered significant attention since January when its R1 model demonstrated performance comparable to offerings from OpenAI and Google at a fraction of the computing cost. The company's success has challenged the prevailing notion that cutting-edge AI requires massive computing resources and investment.
Despite facing U.S. export restrictions on advanced AI chips, DeepSeek has optimized its models to run efficiently on lower-power, export-approved hardware. This strategy has forced competitors to reconsider their hardware dependencies and has influenced market dynamics in the AI sector.
The latest R1-0528 update brings DeepSeek's model closer to the performance of OpenAI's o3 reasoning models and Google's Gemini 2.5 Pro, with significant improvements in reasoning depth, inference capabilities, and hallucination reduction. The company's continued innovation and open-source approach are reshaping expectations for AI model development and deployment efficiency.