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DeepSeek releases update of hit R1 reasoning model

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R1's global success in January hit tech shares outside

China

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DeepSeek's AI praised for performance and cheaper than US

rivals

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Update creates less false output, improves complex

reasoning

(Adds text summary points, context in paragraphs 4-12)

By Brenda Goh and Eduardo Baptista

SHANGHAI/BEIJING May 29 - Chinese artificial

intelligence startup DeepSeek released the first update to its

hit R1 reasoning model in the early hours of Thursday, stepping

up competition with U.S. rivals such as OpenAI.

DeepSeek said via developer platform Hugging Face that

R1-0528 was a minor version upgrade of R1 that nevertheless

significantly improved its depth of reasoning and inference

capabilities, including better handling of complex tasks,

bringing its performance closer to OpenAI's o3 reasoning models

and Google's Gemini 2.5 Pro.

The launch of R1 in January went globally viral, sent tech

shares outside China plummeting, and challenged the view that

scaling AI requires vast computing power and investment. Since

R1's release, Chinese tech giants like Alibaba ( BABA ) and

Tencent ( TCTZF ) have released models claiming to surpass

DeepSeek's.

Thursday's update was initially light on details in contrast

to the launch of R1 in January which was accompanied by a

multi-authored academic paper that the AI community worldwide

has parsed to understand the firm's strategies.

The Hangzhou-based firm said later in a short post on X

that R1-0528 featured improved performance. In a longer post on

WeChat, DeepSeek said the rate of "hallucinations", false or

misleading output, was reduced by about 45-50% in scenarios such

as rewriting and summarizing.

It said the update also enabled it to creatively write

essays, novels and other genres, and had improved capabilities

in areas such as generating front-end code and role-playing.

"The model has demonstrated outstanding performance

across various benchmark evaluations, including mathematics,

programming, and general logic," DeepSeek said.

DeepSeek's success has upended beliefs that U.S. export

controls were holding back China's AI advancements, after it

released AI models that were on a par or better than

industry-leading models in the United States at a fraction of

the cost.

The startup added on Thursday that a variant of its

update was created by taking the reasoning process used by the

R1-0528 model, to then further enhance Chinese tech giant

Alibaba's ( BABA ) Qwen 3 8B Base model, a process known as distillation.

The result was a performance surpassing the original Qwen 3

model by over 10%.

"We believe that the chain-of-thought from DeepSeek-R1-0528

will hold significant importance for both academic research on

reasoning models and industrial development focused on

small-scale models," DeepSeek added.

Bloomberg reported the update on Wednesday. It said that a

DeepSeek representative had told a WeChat group it had completed

what it described as a "minor trial upgrade" and that users

could start testing it.

In response to competition from Deepseek, Google's Gemini

has introduced discounted tiers of access while OpenAI cut

prices and released an o3 Mini model that relies on less

computing power.

Deepseek is still widely expected to release R2, a successor

to R1. Reuters reported in March, citing sources, that R2's

release was initially planned for May. DeepSeek also released an

upgrade to its V3 large language model in March.