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DeepSeek's hardware spend could be as high as $500 million, new report estimates

China's DeepSeek became the biggest topic in tech this week, with many in the industry and on Wall Street focused on a single number: $6 million.

In DeepSeek's paper about its newest artificial intelligence model, the company said that its total training costs amounted to $5.576 million, based on the rental price of Nvidia's graphics processing units. DeepSeek included a clear caveat, saying that the number included only the model's "official training" and excluded the costs tied to "prior research and ablation experiments on architectures, algorithms, or data."

Early in the week, DeepSeek's AI Assistant took the coveted spot for most-downloaded free app in the U.S. on Apple's App Store, dethroning OpenAI's ChatGPT. Global tech stocks sold off, with chipmakers Nvidia and Broadcom losing a combined $800 billion in market cap on Monday.

A new report from SemiAnalysis, a semiconductor research and consulting firm, added more context to DeepSeek's expenses. The firm estimated that DeepSeek's hardware spend is "well higher than $500M over the company history," adding that R&D costs and total cost of ownership are significant. Generating "synthetic data" for the model to train on would require "considerable amount of compute," SemiAnalysis wrote.

The report said the Claude 3.5 Sonnet from Anthropic cost "$10s of millions to train," but noted that Anthropic raised billions for dollars from Amazon and Google, an indication of how much more money is required to run the models and the company.

"It's because they have to experiment, come up with new architectures, gather and clean data, pay employees, and much more," SemiAnalysis said.

DeepSeek's own paper does not include an estimation of its compute costs. The company didn't

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