SUMMARY
- On January 20, 2025, DeepSeek—a Chinese artificial intelligence startup—launched an advanced AI model that first caught the attention of Silicon Valley, and then broader global capital markets. DeepSeek’s new model, R1, demonstrated high performance in various benchmarks, making it competitive with top U.S. AI models such as OpenAI’s ChatGPT, but reportedly did so at a fraction of the cost of incumbent models.
- The company claimed that training its models required less than $6 million of computing power from Nvidia H800 chips. While the initial infrastructure costs may be higher than initially reported, DeepSeek’s pricing is 90% lower than OpenAI’s ChatGPT.
- DeepSeek’s open-source approach and innovative model-training techniques suggest that cutting-edge AI may no longer be exclusive to companies with billion-dollar infrastructure and access to the most powerful chips. Jevons Paradox suggests that as AI models become cheaper and more efficient, overall usage is likely to rise, not fall. Thus, increased accessibility to AI may accelerate adoption across industries.
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