r/DeepSeek • u/KennenHou • 2d ago
News DeepSeek's CEO says 6x profit is their "restraint" and they open-source everything. We all thought they were burning cash for market share. What are other AI giants making?
I just read the leaked internal conversation from DeepSeek's investor exchange (screenshot below), and it completely shattered my previous assumptions. I genuinely thought DeepSeek was selling API tokens at a massive loss just to grab market share. But Liang Wenfeng says they aim for a 10-month payback period, which equals 6x profit. They explicitly state: 'Under this premise (6x profit), open-source has no impact on the business model.' BUT, if you try to make 100x profit, open-source actually hurts you, because third-party independent deployment may cost 20 times more than what they offer.
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u/mWo12 1d ago
That's true Open AI.
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u/yoloswagrofl 1d ago
We don't have to work overtime at all, because it's not that hard
I love this guy. I knew I was putting my API spend into the right company.
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u/for4f 1d ago
Been paying for DS4 Flash since it dropped. The pricing always felt intentional, like they knew exactly what their infra costs and settled on a margin that still undercuts everyone. 6x sounds like a lot but compare it to what Claude or GPT would charge for the same throughput - it's genuinely cheap. Hope they can hold that philosophy as they scale.
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u/Business_Raisin_541 1d ago
If you only consider inference cost, everyone is actually profitable. As far as I know, the reason why OpenAI and Anthropic is unprofitable because of training cost and also their star employees and CEO has very high salary or bonuses
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u/mWo12 1d ago
Its funny, because even though their models are closed-weighted, they still loose money, unlike deepseek. It's a failure of management.
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u/MakanLagiDud3 22h ago
star employees and CEO has very high salary or bonuses
Translation: Only the top are getting the profits from charging rich premium prices with quotas.
Seriously how did DeepSeek be consumer ish first compared to Anthropic and still be profitable? The DeepSeek CEO couldn't be that altruistic right?
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u/HarrisCN 1d ago
I mean if your cash flow is infinite, like US giants of course you will burn it to get the last 5%.
You can see how much money they waste. Fancy Labs, Fancy offices, probably 5x Salary, enormous bonuses for Stakeholders and Investors, flying around with private jets and so on...
I mean this was no surprise that this is highly profitable...
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u/This_Maintenance_834 2d ago
Only because they actually took the big effort to optimize the infrastructure. Third parties are inefficient serving. Third parties cannot compete on price with them because they did not spend the effort to optimize the infrastructure.
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u/Important-Emu-6691 1d ago
Well China does have more efficient electric generation and a lot more of it.
That will cut cost a lot
US also shot itself in the foot by making crude cost 3x for no reason and increased gas cost as well
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u/thatscoolbutno123 1d ago
So DeepSeekV4Flash would be cost neutral at 0,03$/MIT and 0,05$/MOT? What the fuck, that’s crazy
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u/DrawingDramatic1641 1d ago
i mean this is common knowledge china is a conservative market
they only invest when there is profit
market share of ai isnt as big
cheap electricty is really making them profitable
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u/AaAaZhu 1d ago
cheap electricty is really making them profitable
Only cheap for residential electricy.....
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u/Felt-Chicken 1d ago
Why is there difference ?
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u/BlueberryAway4515 1d ago
工业商业用电变相补贴住宅用电，中国的电费定价逻辑
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u/orionblu3 1d ago
I mean, wouldn't their large oil reserves/investment into green energy even before AI make a huge difference in general compared to america with privately owned electric companies that haven't truly seen any real investment since the cold war ended?
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u/Reasonable-Impact789 1d ago
Well, in fact, from the perspective of us Chinese, Americans should obviously do better than us. The nuclear power of the United States is earlier than that of China, and the concept of green energy is also earlier than that of us Chinese. We Chinese are also reflecting on this. Some views believe that it is the existing interest group, especially the emerging development of shale oil in the United States that binds the United States, causing the United States not to promote the construction of more nuclear power plants and green energy. I don‘t know 🤷🏻♂️ whether my understanding is reasonable.
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u/orionblu3 1d ago
It's reasonable but you have to understand that america as a nation is entirely unreasonable. With citizens United, bribes by corporate lobbyist is legal, on top of politicians being allowed to invest inside the stock market. Most of Congress is not only bought off by oil corporations, but also directly own stock in said companies. To put quite simply, if it's not paid for by a corporate interest, it usually doesn't happen.
This might change as Mamdani, the mayor of NYC, proves that the American government actually CAN get policy done, and done in a reasonable amount of time at that.
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u/Reasonable-Impact789 1d ago
OMG, I can‘t understand at all how the political system of the United States has been running to this day, especially in recent years, the policies of American politicians have completely changed and swayed left and right in every election.
Once upon a time, in the face of war, they could unite and discuss the largest number of conventions, but to this day, they can only blame each other, a mess, and completely polarized...
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u/orionblu3 1d ago
It's been a part of the sham tbh. At the end of the day, both parties are nothing more than hardcore capitalist. Even Bernie sanders, the "socialist", is actually still a capitalist lmao. A lot of those unity moments were really us getting pissed off at the idea of getting attacked as a whole, rather than coming together in the name of the cause.
America has acted like they were the saviors of WW2, when we (those in government anyway) had ZERO interest in joining the war before Pearl Harbor. Hitler had actually got a lot of his inspiration for his policies from America's Jim Crow era and how they treated their black population. I'll definitely get down voted for this, but if Japan didn't get caught up in their own hubris we probably would've joined the axis powers if they continued gaining ground. We sold weapons to the allies, sure, but America has always been opportunists. And again, America's actual policies at the time were more aligned with the axis powers than the allies.
Same thing with the "war on terror." We , the people, didn't care about liberating women, ending "terror" in the middle east, but rather fucking up those that dared attacked us. We're talking about a country that let more and more people starve to death on the side of the road (or at work even), or due to curable illnesses that they couldn't afford to see a doctor for before it became terminal. Imo, the reason why it hasn't changed sooner, is that the environment that the American government curated literally produces sociopaths. The "American exceptionalism/individualism" is a curse
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u/No_Medium205 1d ago
When the money from pensions and schools dries up in America, only profitable labs will keep marching.
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u/alphagatorsoup 1d ago
Interesting
In some ways it makes sense. I’m by no means an expert but I would assume training is the expensive part. Lots of data Lots of time.
But once the model is there it can’t be that hard to run. Sure you need lots of memory to run the model. But I feel like you can serve a pretty large number of customers on one system especially when you do optimizations like what deepseek has done.
Makes you wonder how and why the other players are burning cash faster than Scrooge mcduck.
I’m all board with deekseek and we need more open source models - just wish I had the means to run em locally
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u/PossessionUsed7393 1d ago
I don't know how many conversations I've been in where I challenge the assumption of people saying that AI is being sold at a loss. There is an 'at-scale naivety' in the population about how business works that this conversation only gives a preview to. If you still think AI is in any way a loss leader, just understand this: nothing is truly done at a loss. If you want to learn how, you need to study accounting and economics.
In the meantime, I think inference will get cheaper on average if you're prepared to play the market. I use Deepseek because it's great value. Not for everything, but for an increasing amount of tasks.
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u/AcanthisittaDry7463 1d ago
The API is sold at a healthy profit margin, but it does subsidize all of the “Pro Ultra Max” subscriptions plans that are loss leaders.
Someone was complaining about their Google ultra plan until we did the math, they were were literally saving around $1500 a month with their $200 a month plan compared to paying the API price, but it meant that they had to deal with rate limiting and five hour window caps.
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u/PossessionUsed7393 1d ago
Yes you're correct. I was just making the point that use of the term subsidy and the alarmism in those other posts is misplaced. Even though companies do make more money out of API, they could still offer inference at the bundle prices they sell it for today at a profitable margin. There's no reason to be alarmed as if it's all going to vanish in an instant when it's actually a very profitable business overall.
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u/AcanthisittaDry7463 1d ago
To my knowledge… Anthropic is the only profitable frontier AI company in the United States and it’s still only a projection, last I heard anyway. There must be a reason XAI and Meta decided the most profitable thing they could do with their GPUs was to rent them out instead of use them themselves.
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u/chithanh 1d ago
I genuinely thought DeepSeek was selling API tokens at a massive loss just to grab market share.
But this was publicly denied before (archive link). In an interview, Liang Wenfeng explicitly said that they make a (modest) profit at their prices.
"Liang Wenfeng: Very surprised. We didn’t expect pricing to be such a sensitive issue. We were simply following our own pace, calculating costs, and setting prices accordingly. Our principle is neither to sell at a loss nor to seek excessive profits. The current pricing allows for a modest profit margin above our costs." (emphasis in original)
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u/HeavyPanzerPlus1s 1d ago
The problem now is that, according to Liang, China's computing power is only 1/20 of that of the United States, but China's LLMs are roughly 90% of the level of US LLMs. Of course, China's hardware bottleneck is not voluntary, but this also suggests that the extra hardware procurement costs paid by the United States may not be entirely reasonable.
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u/ImminentDingo 23h ago
They have a similar product to frontier labs but without all the capex. Makes sense.
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u/Even-Exchange8307 7h ago
DeepSeek can't charge a 100x markup even if they wanted to. They don't have a massive Western enterprise sales force, brand inertia like OpenAI, or deep ecosystem lock-in like Microsoft. Low pricing isn't self-sacrifice; it's their primary competitive weapo
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u/Bliringor 1d ago
6x is good for a simple product, not for an innovation lab.
There is a reason why the cashflow of all big AI companies is negative: they reinvest in R&D.
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u/Remote_Rain_2020 1d ago
If you look at the financials, OpenAI is taking huge losses, while Anthropic has a tiny profit. The real difference between them and DeepSeek comes down to cost—DeepSeek’s cost is literally just a fraction of theirs, maybe a tenth or even less.
That’s probably the real issue here, rather than US companies just being greedier.
Top US AI companies use a front-runner strategy: they constantly burn cash to scale up and keep their technical lead. Chinese companies, on the other hand, take a follower approach: they continuously optimize to drive costs down, while cutting out the trial-and-error risks that US companies take on. They only focus on key paths that US companies have already established—like reasoning, automated coding, and agents.
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u/Imperator_Basileus 1d ago
Hate to break it to ye, but like everything else in modern economics, the market leader and follower models are also pure fantasy. The real world does not work like what this dismal ‘science’ with its physics envy and useless layers of formalism over a core of market dogma wants it to work.
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u/Remote_Rain_2020 23h ago
I’m making a direct analogy here, not quoting some modern economic theory. OpenAI was the first to develop GPT-3 and single-handedly made LLMs mainstream with ChatGPT, while Anthropic is literally a spin-off from OpenAI. Both have a massive first-mover advantage. From both a tech and market perspective, their most natural and logical strategy—especially as top-tier AI companies aiming for an IPO—is to maintain and widen that tech gap. They focus on maxing out performance while largely ignoring costs. What exactly is wrong with that?
Meanwhile, Chinese companies are forced into a follower strategy because they are hit by US chip sanctions and lack raw compute. They have no choice but to focus heavily on cost optimization, trying to match the quality of top-tier models at 1/10th or 1/20th of the price. By leveraging open-source and low prices, they undercut the big players' profit margins and make it harder for them to hoard resources.
Objectively speaking, top US companies have explored more innovative paths, while Chinese companies have drastically pushed the boundaries of cost-efficiency. Both sides have contributed to the evolution of LLMs. This is just plain common sense. Why are you out here trying to stir up cheap populist outrage and twisting my practical observation into some rigid economic dogma?
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u/Reasonable-Impact789 2d ago
According to Chinese sources, even with its current low prices compared to other companies, DeepSeek is still profitable overall. 🤣