Wait. You mean every major tech company going all-in on “AI” was a bad idea. I, for one, am shocked at this revelation.
The funny thing is, this was unveiled a while ago and I guess investors only just noticed it.
Text below, for those trying to avoid Twitter:
Most people probably don’t realize how bad news China’s Deepseek is for OpenAI.
They’ve come up with a model that matches and even exceeds OpenAI’s latest model o1 on various benchmarks, and they’re charging just 3% of the price.
It’s essentially as if someone had released a mobile on par with the iPhone but was selling it for $30 instead of $1000. It’s this dramatic.
What’s more, they’re releasing it open-source so you even have the option - which OpenAI doesn’t offer - of not using their API at all and running the model for “free” yourself.
If you’re an OpenAI customer today you’re obviously going to start asking yourself some questions, like “wait, why exactly should I be paying 30X more?”. This is pretty transformational stuff, it fundamentally challenges the economics of the market.
It also potentially enables plenty of AI applications that were just completely unaffordable before. Say for instance that you want to build a service that helps people summarize books (random example). In AI parlance the average book is roughly 120,000 tokens (since a “token” is about 3/4 of a word and the average book is roughly 90,000 words). At OpenAI’s prices, processing a single book would cost almost $2 since they change $15 per 1 million token. Deepseek’s API however would cost only $0.07, which means your service can process about 30 books for $2 vs just 1 book with OpenAI: suddenly your book summarizing service is economically viable.
Or say you want to build a service that analyzes codebases for security vulnerabilities. A typical enterprise codebase might be 1 million lines of code, or roughly 4 million tokens. That would cost $60 with OpenAI versus just $2.20 with DeepSeek. At OpenAI’s prices, doing daily security scans would cost $21,900 per year per codebase; with DeepSeek it’s $803.
So basically it looks like the game has changed. All thanks to a Chinese company that just demonstrated how U.S. tech restrictions can backfire spectacularly - by forcing them to build more efficient solutions that they’re now sharing with the world at 3% of OpenAI’s prices. As the saying goes, sometimes pressure creates diamonds.
Last edited 4:23 PM · Jan 21, 2025 · 932.3K Views
and it’s open-source!
how long do you think it’ll take before the west decides to block all access to the model?
They actually can’t. Being open-source, it’s already proliferated. Apparently there are already over 500 derivatives of it on HuggingFace. The only thing that could be done is that each country in the West outlaws having a copy of it, like with other illegal materials. Even by that point, it will already be deep within business ecosystems across the globe.
Nup. OpenAI can be shut down, but it is almost impossible for R1 to go away at this point.
Nvidia’s most advanced chips, H100s, have been banned from export to China since September 2022 by US sanctions. Nvidia then developed the less powerful H800 chips for the Chinese market, although they were also banned from export to China last October.
I love how in the US they talk about meritocracy, competition being good, blablabla… but they rig the game from the beginning. And even so, people find a way to be better. Fascinating.
Wow, China just fucked up the Techbros more than the Democratic or Republican party ever has or ever will. Well played.
Well… if there is one thing I have to commend CCP is they are unafraid to crack down on billionaires after all.
I am extremely ignorant of all this AI thing. So please can somebody “Explain Like I’m 5” why can this new thing can wipe off over a trillion dollars in US stock ? I would appreciate it a lot if you can help.
"You see, dear grandchildren, your grandfather used to have an apple orchard. The fruits were so sweet and nutritious that every town citizen wanted a taste because they thought it was the only possible orchard in the world. Therefore the citizens gave a lot of money to your grandfather because the citizens thought the orchard would give them more apples in return, more than the worth of the money they gave. Little did they know the world was vastly larger than our ever more arid US wasteland. Suddenly an oriental orchard was discovered which was surprisingly cheaper to plant, maintain, and produced more apples. This meant a significant potential loss of money for the inhabitants of the town called Idiocracy. Therefore, many people asked their money back by selling their imaginary not-yet-grown apples to people who think the orchard will still be worth more in the future.
This is called investing, children, it can make a lot of money, but it destroys the soul and our habitat at the same time, which goes unnoticed by all these people with advanced degrees. So think again when you hear someone speak with fancy words and untamed confidence. Many a times their reasoning falls below the threshold of dog poop. But that’s a story for another time. Sweet dreams."
So if the Chinese version is so efficient, and is open source, then couldn’t openAI and anthropic run the same on their huge hardware and get enormous capacity out of it?
Not necessarily… if I gave you my “faster car” for you to run on your private 7 lane highway, you can definitely squeeze every last bit of the speed the car gives, but no more.
DeepSeek works as intended on 1% of the hardware the others allegedly “require” (allegedly, remember this is all a super hype bubble)… if you run it on super powerful machines, it will perform nicer but only to a certain extend… it will not suddenly develop more/better qualities just because the hardware it runs on is better
Emergence of DeepSeek raises doubts about sustainability of western artificial intelligence boom
Is the “emergence of DeepSeek” really what raised doubts? Are we really sure there haven’t been lots of doubts raised previous to this? Doubts raised by intelligent people who know what they’re talking about?
Remember to cancel your Microsoft 365 subscription to kick them while they’re down
Joke’s on them: I never started a subscription!
