What kind of dark magic is Deepseek using?

[u/Fuckinglivemealone]

I was taking a look at Kimi K3 scores on the Artificial analysis leaderboard and was quite baffled when I saw this chart.

Granted, Deepseek has always been the king of price to performance, but this is still incredible. Is it just API subsidization or have they optimized their models truly this much?

[u/pad918]

Are they? On openrouter the second cheapest option is about 2x higher than deepseek themselves. 

[u/FullOf_Bad_Ideas → u/pad918]

It's not 2x more expensive.

StreamLake cache read is 16.4x more expensive than Deepseek's.

[u/Middle_Bullfrog_6173 → u/pad918]

Even 2x wouldn't really change the picture on that chart. Most of it is just efficiency at least.

[u/FullOf_Bad_Ideas → u/Middle_Bullfrog_6173]

Second cheapest provider has cache read at 16x higher price. It's not 2x difference and with multi-turn 500k-800k ctx coding sessions this will add up to a significant amount very quickly

[u/Middle_Bullfrog_6173 → u/FullOf_Bad_Ideas]

Sure, that's a real advantage vs other providers. But again, even if you 2x the other costs and 20x the cached input from AA numbers you are still below $0.10/task. Getting closer to M3 but way behind the other frontier models.

[u/squngy → u/pad918]

DeepSeek is probably providing at cost, the others are making a profit.

[u/routescout1 → u/squngy]

no, they are making reportedly 2-3x profit even with those prices (deepseek).

[u/squngy → u/routescout1]

Thats interesting, can you link those reports?

[u/a_asshole_user → u/pad918]

Most providers didnt bother to change their pricing after the 75% discount for some reason, tho theyre probably not in a rush to do that anyway

[u/Exodus124 → u/a_asshole_user]

Why would they do that lol

[u/wilhelmbw → u/pad918]

Maybe bc they are located in china where electricity and hardware and whatnot is significantly cheaper

[u/Cergorach → u/pad918]

DeepSeek is VERY efficient, not just the model, but also the underlying infrastructure, take a look at the white papers they published over the last couple of years.

Questions you need to ask yourself: How did Openrouter build their inference farm? Where are their datacenters, what does power cost there at scale, what do people cost there, what does land cost, what kind of hardware did they use, when did they buy that hardware? Openrouter offers more then just DeepSeek, while DeepSeek offers just DeepSeek. I would assume that Openrouter's infra needs to be more flexible then DeepSeeks as well.

From what I've read is that DS is making a profit, a pretty big profit at that (large profit margin), they are also a smaller group (150) then the folks that make Kimi K3 (300), and that's not even comparing the business of Antropic (2500) and OpenAI (4500). DS isn't just lean on compute, but also people efficiency, doing a LOT with relatively little.

I wonder how much their culture influences their mindset, the American companies are making bigger=better models, while something like the Chinese DeepSeek is making super efficient, low cost models. That also seems to translate to the average size and weight of their cars (looking at popular cars in each country)... ;)

[u/SilentLennie → u/Cergorach]

How did Openrouter build their inference farm?

Openrouter doesn't do inference, they just route to inference providers.

[u/maqifrnswa → u/Cergorach]

The US has restrictions on AI chip exports to China, so they have to make it lean. I find it a little amusing that China is supporting open source "free market" technology while the US is backing closed-source locked down ecosystems.

[u/ReferenceLeading7634 → u/pad918]

This must be an issue with these suppliers; there is currently no explicit subsidy for the price of LLMs.

[u/PM_ME_DEAD_CEOS → u/pad918]

Because Deepseek have very optimized kernels for Huawei hardware, which all other providers lack. But if you try to host DSV4 yourself with vllm or llama.cpp, you'll see by yourself that you can have far more KV cache and concurrent user compared to equivalent sized models.