DeepSeek misled the AI market, training costs range in the billions not millions

As an Amazon Associate, we earn from qualifying purchases. TweakTown may also earn commissions from other affiliate partners at no extra cost to you.

A research firm has found after conducting an extensive analysis that DeepSeek spent much more to train its R1 model than the touted $5 million.

2

Research firm SemiAnalysis looked at the new AI model that shook up the tech industry when it was announced, as the Chinese creators, DeepSeek, stated it only cost $6 million to create a model that was on par with OpenAI's most advanced o1 model. The announcement of the cost of DeepSeek's R1 model threw the tech space into a tailspin, wiping approximately $1 trillion away from the stock market and $600 billion from NVIDIA. For comparison, OpenAI's "GPT-4 model" is estimated to have cost anywhere between $100 - $200 million to train.

After DeepSeek's announcement, the market sentiment was the cost of training new AI models was completely overvalued, but now, according to SemiAnalysis, DeepSeek's R1 model cost the company a lot more than $5 million. The report states that DeepSeek purchased 10,000 units of NVIDIA's A100 GPUs in 2021, then acquired 10,000 "China-specific" NVIDIA H8000 AI GPUs and an additional 10,000 NVIDIA H100 GPUs. All of these GPUs, and training costs translates to $1.6 billion in capital expenditures for DeepSeek, with an estimated running cost of approximately $944 million.

• Read more: OpenAI says DeepSeek stole its data to train its breakthrough AI
• Read more: Move over OpenAI and DeepSeek, a new Chinese AI model claims supremacy over both
• Read more: US officially launches probe into DeepSeek over illegal use of NVIDIA chips