While most stock prices for most chip makers have reacted negatively as this implies much lower compute than earlier anticipated, we believe this could shift focus from capex to cost efficient AI platforms, possibly benefitting Indian IT.
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DeepSeek, a Chinese AI startup, has developed the R1 model, which rivals leading AI reasoning models such as OpenAI's O1. Using a Mixture-of-Experts architecture, R1 activates only 37 billion of its 671 billion parameters during processing, significantly reducing computational costs and energy consumption while maintaining top-tier performance.
Remarkably, DeepSeek achieved this with a development cost of around $6 million (although this is being debated), defying industry norms, which take about 10 times the price to achieve similar results.
Further, by making R1 fully open-source, DeepSeek has not only increased access to cutting-edge AI but also intensified global competition, pushing U.S. companies to rethink their strategies and investments.
While most stock prices for most chip makers have reacted negatively as this implies much lower compute than earlier anticipated, we believe this could shift focus from capex to cost efficient AI platforms, possibly benefitting Indian IT.
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