Assuming DeepSeek really only cost $6 millions, is that even bad?
As everyone has probably heard by now, the "AI bubble has burst" due to the release of the r1 AI model by the Chinese AI startup DeepSeek. As a result, companies like Nvidia and TSMC saw a sharp decline at the beginning of the week.
The main reason for this is that DeepSeek claims the development costs for its model were only $6 million, while outperforming OpenAI’s o1 and other models in key benchmarks. In contrast, OpenAI has received $6.6 billion in funding—more than a thousand times what DeepSeek supposedly spent.
Regardless of whether it's actually true that DeepSeek’s model only cost $6 million (after all, we’re talking about China), I wonder if this would even be a bad thing for the semiconductor and chip market if it were true.
This assumption is based on the following points:
- If DeepSeek has indeed managed to outperform the established AI players with just a fraction of their funding and workforce, this should significantly lower entry barriers for new players and further intensify competition.
- Even if current AI standards can be replicated with a fraction of the resources, that wouldn’t be a reason to stop. Instead, the logical step would be to scale up the most efficient model, since the ultimate goal remains the creation of Artificial Super Intelligence.
What do you think?
P.S. I’m personally not invested in tech, as I believe we’re in a bubble fueled by AI, which will burst sooner or later anyway. With this post, I simply wanted to challenge the current consensus and conclusions regarding DeepSeek’s impact on US tech.