They haven't raised enough money to be selling at a loss. And selling at a loss to gain market share in an industry with zero switching friction between sellers is not a strategy. That doesn't make sense.
Loss leading only works when
- it leads to a situation that allows you to prevent competitors from selling to your customers (gilded age railroad and pipeline industries are great examples). Then you can eventually raise prices and not lose back any market share.
- or when it allows you to remarket to customers and make back the difference (selling a single console at a loss to sell a whole library of high margin videos games, or selling jet engines at a loss to lock in 30-year maintenance contracts).
Yeah, cool theory, but they are selling at a loss. We know that because their model is open and available on other providers too. No other provider even sells a quantitized version of DeepSeek V4 Pro at that price.
Also, in case of LLM, market share = more people uploading their whole codebase/legal documents/unfinished books/literally everything to your servers for you to use in future training. So the incentive to sell at a loss is much stronger than other kinds of service.
We are missing the fact that they have created their GPU's that are now just 4-5 years behind. And considering it's China, which does everything-hardware at insane scale, and efficiency, my guess is that they are at step-1 now... gain market share at loss, and at the same time, gradually, start plugging their in-house cards to power these models to gauge their performance on real workloads.
Once they cross a certain threshold, nVidia can say goodbye to it's monopolisitic profit margins of over 70%.
GPU infra capex is the biggest spend for the inference providers as of now, power, second biggest.
China has already cracked the power part, they are now close to cracking the GPU part.
The site doesn't suggest anything useful. It's more of a fun meme.
Building a datacenter that will produce hundreds of billions of dollars worth of tokens over a multi-decade life shouldn't surprise anyone that it's in the red in year 1 or 2. There's a lot of front loaded capex in this business. If someone built a tractor factory you wouldnt expect 1 year payback.
But the site sort of implies that these companies are selling tokens for less than it takes to inference them. As if this is some sort of COGS ledger. Especially by throwing Nvidia in there. Don't take it too seriously.
DeepSeek hasn't raised enough money to be actively selling tokens at a loss. They have a small team, extremely low overhead relative to other labs, operate in a place with the essentially the cheapest commercial electricity rates in the world, and their architecture lends itself very well to cheap inference.
The median age of Japan went from 37 in 1990 to 50 in 2026. That's an insurmountable headwind. Soon, half the country will be elderly. That's no way to run a vibrant dynamic economy.
Japan is getting poorer. People online love to talk about American stagnant wages, but Americans are considerably richer than they were 20 years ago. The median American earns 20% more in real terms, and even the bottom quintile of earners in America has increased their inflation adjusted earnings by 15%. In the same time period, the median Japanese inflation adjusted earnings is down 2.8%.
Compared to 20 years ago, Japanese people travel much less (millions fewer can afford to go overseas). Residential energy is 35% more expensive per kwh, compared to only 5% in the US. Food as a portion of monthly Japanese spend is 48% more expensive than it was 20 years ago. Despite millions of vacant dwellings, the home ownership rate is slipping. They earn less and they spend less.
Tokyo may seem quaint to American visitors clanking down their metal Chase travel credit card for more sushi, but for the typical Japanese, although they take it with grace and in stride, they have mired in stagnation and degrowth for a generation.
These samsung workers are producing the compute that reduces demand for american coders. It's like pointing out that tractor factorymen are getting bonuses while the stable-manager gets laid off. Well of course.
And why can money hire workers? Its because that money lets them get goods that was produced by previous investments. Without the investor class you wouldn't get large new projects organized. The alternative to private investments is communism, and we all know how that works out, it results in politicians hogging all the wealth and generally making even worse decisions with that money than the greedy capitalists does.
People prefer working for greedy capitalists since it generally pays better than working for the government.
The only reason capital has money is incompetence of our revolutionary ancestors. There is no evidence people with money deserve it. I say, let us at the least take everything they own and redistribute it reasonably, and let us see who the real investors are. We should probably repeat this process every six months or so until society can stabilize
The problem is that they tend to benefit their members in a zero sum way. For example the LIRR wants a double digit raise not in exchange for hitting targets on on-time arrivals or some other metric. They want it or they strike and hold the community hostage. It bothers me that there's no value exchange it's just take take take, and ultimately at my expense.
Double digit raise in this economy and for the economic strata that does this work and is more exposed to prices more than some others, double digit sounds reasonable. The union just wants their members to not be piss poor. Is this bad?
They earn $220k a year for jobs that aren't worth that. Income equals expenditure; they are one and the same. So the $220k comes from someone else, and those people aren't getting value for money, they're being robbed and stolen from by a greedy union that doesn't know when to stop biting the hand that feeds. It's pretty disgusting.
Worse, public sector unions are ultimately at my expense in a way that I can't even fix by not buying the product, since they're taking it from my taxes.
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