A wise man once said, allow nothing get in the way of a great story; and Deep Seek is a great story. But end of the day, we need to sit down and talk about facts.
Deep Seek is not a super hero team of 200 IQ geniuses. They didn't "do the impossible." The reason they did what Big Tech. did with a fraction of the costs is because China does everything the US does at a fraction of the costs. It's the same reason BYD can sell an EV brand new for $11,500, but a "domestically built EV" cost $50,000+ in the US. It's why DJI can sell a drone for $500, but Skydio sells it at $2,000. It's why a medical procedure in China cost $500, but the same medical procedure in the US costs $5000.
It's the currency, stupid. Chinese labor, energy, infrastructure, food, medicine, everything seems absurdly cheap when converted to dollars. And that's what Deep Seek's costs were evaluated in - dollars. Nobody ever talks about the amount of energy they used to train the model and how that compares to the energy spent by other AI companies. No, we always talk about dollars, dollars, dollars - and that's the same story across every industry - China does it cheap. AI is just the latest to be hit by it.
Yes, there's a bit more to it than that. Institutional bloat - which doesn't just affect US Big Tech., but also Chinese Big Tech. companies like Baidu, Tencent, Alibaba, etc. - that also has tremendous costs. It's why Byte Dance is investing billions of dollars into the effort, while Deep Seek with its relatively small team with minimal middle management, could get away with a lot less. Fact is, if you have thirty Directors, Senior Directors, and Vice Presidents making millions of dollars a year each, it's going to cost you billions on compensation alone especially with all the usual corporate alignment, meetings, delays, etc.
But that's not just an US problem. That's a big corporation problem. It's why nobody in Chinese Big Tech. is claiming it's cheap. Because it isn't, when your corporation becomes that large.
Deep Seek's advantage is the advantage enjoyed by every Chinese company in competition vs. the US - cost. Their disadvantage will also be the same - it'll be hard for Deep Seek to keep hold of its talent in the coming days, as recruiters start reaching out to poach them for ten times the salary. But maybe that's okay. As long as China maintains a talent advantage vs. the US, and there's no shortage of young Chinese AI graduates hungry for fame and fortune, companies like Deep Seek can continue to surprise the world about Chinese costs in dollars.
