On DeepSeek and Export Controls

There is an ongoing trend where companies spend more and more on training powerful AI models, even as the curve is periodically shifted and the cost of training a given level of model intelligence declines rapidly. It's just that the economic value of training more and more intelligent models is so great that any cost gains are more than eaten up a... See more

Making AI that is smarter than almost all humans at almost all things will require millions of chips, tens of billions of dollars (at least), and is most likely to happen in 2026-2027. DeepSeek's releases don't change this, because they're roughly on the expected cost reduction curve that has always been factored into these calculations.

The three dynamics above can help us understand DeepSeek's recent releases. About a month ago, DeepSeek released a model called "DeepSeek-V3" that was a pure pretrained model 3 — the first stage described in #3 above. Then last week, they released "R1", which added a second stage. It's not possible to determine everything about these models from th... See more

All of this is to say that DeepSeek-V3 is not a unique breakthrough or something that fundamentally changes the economics of LLM’s; it’s an expected point on an ongoing cost reduction curve. What’s different this time is that the company that was first to demonstrate the expected cost reductions was Chinese.