Satya tweeted about jevons paradox as well
.
Well… all conclude about the same… expressed differently… optimization is a good choice of word.
IMHO, hyperscalers would definitely scale down Capex… wondering what market expect… Apparently, with the discovery of test-time scaling, Chinese hyper scalers no longer buying any NVDA chips, they are buying from Huawei.
Optimization is a better word for finesse 
.
Didn’t read his tweets. I suspect he is referring to businesses that use AI compute on their cloud computing platforms. Yes, demand should increase if MSFT passes along the savings.
Early part is about Deep Seek and NVDA. Learn a few things…
Stated clearly in the tech paper that $5.7mil doesn’t include all costs.
Deep Seek was released on Dec 24 without fanfare. Media blew up the narrative. May be paid by some big boys to bring down the market.
Disclosure: Didn’t sell or add any NVDA.
1 Like
Added 100 Nvidia today
3 Likes
Chinese companies that have H100s can be legitimate since export ban was announced in Oct 2022 while H100s was launched in Mar 2022. Any order before the export ban is effective is legitimate.
DD and IMHO on $5.57 million
The team that develop Deep Seek was started as a side project to utilize the spare capacity of GPUs (these could be H100s ordered before the export ban). The main role of the team is to develop trading algorithm for High Flyer. So the early part of the project was probably not well accounted for and could have utilized H100s (spare capacity). In order to minimize unnecessary hooah, the tech paper excludes those early part of the cost and mention only those time when they use H800s.
Disclosure: Own NVDA and AMD.
Elon is unbelievably silent about Deep Seek.
Those who worried about their data being sent to China, can download Deep Seek to their iPhones and run it locally (no access to internet).
Some thoughts:
Whether Jevon’s paradox hold true or not depends on companies that use AIs to provide services. Apple is one of these companies, currently struggling to incorporate AI (Apple Intelligence, not Actually Indian) that consumers love to use (more 
).
Jan 28, 2025
Market is FOMOing into
20% of Nvidia revenue comes from Singapore. Does tiny Singapore generates enough electricity to power 20% of Nvidia’s GPU? Where do they end up?
Much ado about nothing. Turns out Deepseek has been stockpiling Nvidia GPUs for years. Won’t be surprised they also bought some more from Singapore.
50K Nvidia GPUs?
Deep Seek v3 uses 2000+ H800 GPUs to train.
Deep Seek is a side project of High Flyer. So expect High Flyer has more than 2000 GPUs.
Export ban of A100 and H100 were announced on Aug 31, 2022… so any Chinese companies can buy them before the ban.
So is not a surprise that High Flyer could have 10000 to 50000 GPUs of various type.
Btw don’t equate Deep Seek as High Flyer. Deep Seek uses spare GPU capacity of High Flyer.
High Flyer started this side project DeepSeek because Xi kiboshed their quant trading business. Xi thinks quant finance is a waste of resources. He wants all resources put into hard asset manufacturing and engineering, like making EV’s and warships.
Anyway, market overreacted yesterday. We may not need Nvidia chips in the future, but that future has not arrived yet. Much ado about nothing.
I asked Perplexity: is there a black market for nvidia h100 in china.
Its answer:
Yes, there is a thriving black market for Nvidia H100 GPUs in China. Despite U.S. export restrictions banning the sale of advanced Nvidia chips like the H100 to China, these processors are still being smuggled into the country through various channels[1][5].
Key aspects of this black market include:
-
Smuggling methods:
- Travelers hiding chips in luggage[5]
- Using personal contacts at distribution channels in Southeast Asia[5]
- Omitting model numbers on paperwork to evade detection[5]
-
Availability:
- H100 GPUs are reportedly easy to find in electronics markets like Huaqiangbei in Shenzhen[3]
- Chips are advertised on Chinese social media and e-commerce sites like Alibaba’s Taobao[7]
-
Pricing:
- At one point, H100-based servers were quoted at over ¥3 million (more than $420,000), about 50% higher than Nvidia’s official pricing[3]
- Prices have since dropped due to anticipation of the newer H200 model, with servers now costing around ¥2.7 to ¥2.8 million in mainland China[3]
-
Impact:
- Chinese cloud providers can offer Nvidia AI servers at lower rates than U.S. counterparts, charging about $6 per hour compared to $10 in the U.S.[7]
- This black market allows Chinese tech firms to remain competitive in AI development despite sanctions[7]
While Nvidia maintains that these illegal sales represent a small fraction of its global business, the persistence of this underground market highlights the ongoing demand for advanced AI chips in China and the challenges in enforcing export controls[3][5].
Citations:
[1] Underground network smuggles Nvidia's AI GPUs into China despite US sanctions — some smugglers even sell entire servers | Tom's Hardware
[2] ByteDance Is Now the Biggest Buyer of Nvidia AI Chips in China: Report - Business Insider
[3] Nvidia H100 GPU black market prices drop in China — banned by US sanctions but still available | Tom's Hardware
[4] [News] China Bypasses Restrictions to Acquire NVIDIA Chips, with Cloud Service Costs Even Lower Than in the U.S. | TrendForce News
[5] The blackmarket for Nvidia H100, A100 AI GPUs is exploding — US-imposed export sanctions cause Chinese buyers to come up with imaginative techniques to get their hands on precious cargo | TechRadar
[6] Chinese data centers told to stick to Nvidia chips, domestic chips not compatible | TechRadar
[7] China's Markets Still Manage To Get Nvidia AI Chips Via Smuggling: Report - NVIDIA (NASDAQ:NVDA) - Benzinga
[8] https://www.reuters.com/technology/chinas-military-government-acquire-nvidia-chips-despite-us-ban-2024-01-14/
[9] The Impact Of US Export Regulations On Nvidia AI Chips To China
Why harp on the cost of training? We know full cost is more than $5.57 million since tech paper stated this is only for final release and exclude cost of experimentation, data acquisition, infrastructure, personnel,… Full cost or cost of final release is more relevant to open source community?
DeepSeek’s $5.6M Training Cost: A Misleading Benchmark for AI Development?
Inference of Deep Seek run at 93% cheaper than other chatbots, according Gavin Baker.
Also has tons of algorithm breakthroughs which American AI companies are copying, according to Perplexity CEO, Aravind Srinivas.
NVDA’s officially state that chips used by Deep Seek are fully export control compliant.
IMHO:
Demand for NVDA chips…
Short-term 1 year, hyper scalars won’t cut orders.
Med-term 2-4 years, not sure.
Long-term 5+ years, Jevons paradox.
High Flyer is operational.
Disclosure: Didn’t sell or add any NVDAs.
Jan 29, 2025
Interview Aravind Srinivas by Diedre Bosa 4 days ago have addressed many issues that many bloggers are BSing in social media. Also, these bloggers didn’t seem to have read the tech paper and talk shit based on claims by a few CEOs. Guess many egos are hurt… move forward… heed Trump’s “wake up call" and stop living in “I’m the best” self image.
Interview
…
H100 by ChatGPT… there are bloggers citing use of H100 as illegal… no f… brain
…
Wake up call
…
Perplexity.ai embraces Deep Seek.
…
AMD embraces Deep Seek.
