Maybe the Chinese are playing the long game by trying to bankrupt the US competition? Because there's no way this is financially viable.
Maybe the Chinese are playing the long game by trying to bankrupt the US competition? Because there's no way this is financially viable.
Small team, cheap electricity, very efficient models. Many western companies operate at a loss to gain market share. Why can't the Chinese?
Inference is cheap. I bet the financials of these Chinese companies are much saner looking than any of the big US AI companies which are bloated by investors.
DeepSeek is very likely selling tokens at a loss. There're many cloud providers that provide you with DeepSeek V4 Pro via API, and those services at least twice as expensive as DeepSeek itself.
I see no evidence anywhere that "inference is cheap". To my knowledge this is a myth being spread to pretend ChatGPT or Claude will one day make any economic sense.
DeepSeek likely operates at a loss. How big the loss is anyone's guess.
Meanwhile I am happy using their model. It is really good, to a point I forget I am not using Codex or Claude.
DeepSeek hasn't raised enough money to be actively selling tokens at a loss. They have a small team, extremely low overhead relative to other labs, operate in a place with the essentially the cheapest commercial electricity rates in the world, and their architecture lends itself very well to cheap inference.
If you think heavily subsidizing AI models isn’t financially viable, I have some bad news for you about US AI companies.
Deepseek has made some incredible advancements in model efficiency, and more importantly actually publishes those advancements so everyone can benefit from them.
> more importantly actually publishes those advancements so everyone can benefit from them.
I suspect American inference providers implement the efficiency gains, and pad their margins rather than pass the savings along to the consumer.
Federal ban incoming then. They did it with cars already.
They’re going to have to. It’s $0.87 vs $30
Maybe not. I don't see how US inference providers can compete anyway with commoditized models. Costs are out of control here and the infrastructure is way worse.
For sure. But also they’re building an electrostate with 100% electricity redundancy and dirt cheap electricity. They might actually be able to sustain this.
US suppliers are fine and won't go bankrupt, they can just focus on serving bigger "Pro" class models from their large datacenters. In fact cheap AI makes the bigger and smarter models more useful because it's smart enough to draft a clear question to the model, which helps minimize wasted tokens.
> US suppliers are fine and won't go bankrupt, they can just focus on serving...
For a while, US automakers thought the same of Japanese, then Korean car manufacturers, and Musk laughed at Chinese EV makers in an interview >12 years ago. People learn and get better at making things until they catch up with the frontier.
Chinese EV makers have a few interesting technologies especially wrt. batteries but they're still very far from catching up to the frontier in a general sense. From that narrow POV Musk was absolutely correct.
What is the "frontier" in EVs that Chinese automakers are yet to achieve? And what automaker is at this so called frontier?
What the hell are you talking about? They have batteries that charge 0-80% in 5 minutes even at -30F. More full featured EVs at half the price with similar acceleration rates and higher top speeds. Total ranges are comparable or better. What is this frontier you speak of? I think the only thing US companies are far ahead on is self driving.
I’m an American fucking patriot but facts are facts.
US providers are burning VC money because they have been selling the idea of total world domination. Even the government has bought into that. Now suddenly they are not longer dominating the field and even need uncle Sam to protect them from foreign competitors.
When VC pulls out, some of them may go bankrupt.
They can still dominate wrt. the biggest and smartest models. DeepSeek does effectively nothing to change that. Of course these big models will be served at a very steep price in order to fully and completely recoup the investment, but there's no reason why that couldn't work if they really are smart enough and if the market value of smarts follows any kind of scaling law.