As "DeepSeek" Enters the AI Market
Last week, DeepSeek, a Chinese company, gained global attention for its AI model performance. Industry leaders provided the following reactions:
Sam Altman, CEO of OpenAI: "DeepSeek's R1 is an impressive model, particularly around what they're able to deliver for the price. We will obviously deliver much better models and also it's legit invigorating to have a new competitor! We will pull up some releases."
Microsoft CEO Satya Nadella: "As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can't get enough of."
Mark Zuckerberg, CEO Meta: "It's probably too early to really have a strong opinion on what this means for the trajectory around infrastructure and CapEx. There are a bunch of trends that are happening here all at once."
Eric Schmidt, former chief executive and chair of Google: "[DeepSeek's] algorithmic innovations remind us that China and the US are neck and neck and that our technological edge isn't guaranteed, pushing our industry to make AI more efficient ... we'll need to continue to invest in talent, support our vibrant open-source ecosystem, and ensure we out-innovate, not just outspend, our competitors."
Nvidia released a statement: "DeepSeek is an excellent A.I. advancement and a perfect example of test time scaling... DeepSeek's work illustrates how new models can be created using that technique, leveraging widely available models and compute that is fully export control compliant."
On Friday, Nvidia CEO Jensen Huang met with U.S. President Donald Trump at the White House to discuss AI-related matters, including DeepSeek.
Trump said: "I can't say what's gonna happen. We had a meeting. It was a good meeting."
An Nvidia spokesperson said: "We appreciated the opportunity to meet with President Trump and discuss semiconductors and AI policy ... Jensen and the President discussed the importance of strengthening U.S. technology and AI leadership."
Note: the following chart compares the input and output costs of DeekSeek R1 and OpenAI O1.
OUR TAKE
DeepSeek’s advancement in developing high-performance AI models with lower computational demands marks a significant step toward democratizing AI development.
Its release signals a shift in the industry, where innovation is no longer driven solely by established leaders like OpenAI, Google, and Meta but will include emerging organizations as well.
DeepSeek's efficiency gains may dampen, but will likely not offset the surging demand driving increased power consumption, data centers, and GPU production.