DeepSeek - How a Chinese AI Startup Shook Silicon Valley

"So, you don’t just need a big data center to train the models anymore – you also need one to run them as the more processing power these models have access to the smarter they get. The same chips needed for training AI are also used in inference data centers. Now DeepSeek is more efficient at inference than other models too and can use the cheaper Nvidia chips – but it is still smarter when it has more processing power – so there is still a reason to believe that there’s plenty of demand for Nvidia chips – as long as the tech doesn’t change again."

"The thing is that now that DeepSeek have shown the way, these efficiencies will significantly reduce the cost to those who follow in their footsteps – but that still doesn’t mean that you can do the same and build an advanced AI model with six million dollars."

"Now that the AI race is heating up, its not obvious that we will hear a lot more about AI safety – especially if leading models are open source, widely available and can be modified by users."

"At present there is no reason to expect DeepSeek to be the long term winner – firstly because it is too much of a security risk in countries that are worried about Chinese influence – but mostly because it’s way too early to know who the overall winner will be – or even how many winners there’ll be."

"It is quite possible that in different parts of the world different AI models will be used because countries don’t trust each other."

"There is no reason to think that any of the leading AI companies today will even be around in a decade."

"The fact that DeepSeek was able to build a reasoning model with Nvidia’s older, slower chips suggests that the door is open to other competitors – not just in building AI models but also in building chips."

"Deepseek’s efficiency might be good for big tech – as it means that they might not need to spend nearly as much on building their AI models as was previously expected – and it also means that we might not be in a winner takes all model – like was the case for internet search."

"If adoption is being held back by price, then efficiency gains should lead to greater use. I can see this being the case for businesses who have commercial uses for AI – and the cheaper it is, the more commercial uses they might find..."

"If the models are easily replicated – it will be difficult to charge a lot for them – and it just becomes a commodity business like selling mobile phone contracts."

"One way or another, the AI bubble, if there is one, may still pop, but it didn’t pop this week."