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

A research firm has estimated the expenditure needed to create DeepSeek's R1 model, which caused the market to drain $1 trillion when it was unveiled.

DeepSeek misled the AI market, training costs range in the billions not millions
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TL;DR: A research firm, SemiAnalysis, revealed that DeepSeek's R1 model cost significantly more than the claimed $5 million.

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.

DeepSeek misled the AI market, training costs range in the billions not millions 651165165

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.

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NEWS SOURCE:semianalysis.com

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Jak joined the TweakTown team in 2017 and has since reviewed 100s of new tech products and kept us informed daily on the latest science, space, and artificial intelligence news. Jak's love for science, space, and technology, and, more specifically, PC gaming, began at 10 years old. It was the day his dad showed him how to play Age of Empires on an old Compaq PC. Ever since that day, Jak fell in love with games and the progression of the technology industry in all its forms.

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