DeepSeek plans significant price hikes for its AI services

DeepSeek, a Chinese AI startup, has announced to its clients that it plans to significantly increase prices for its AI services. While the exact amount of the change was not specified, current prices are considerably lower than those of competitors. DeepSeek charges $0.14 per million input tokens and $0.28 per million output tokens. For comparison, Moonshot AI charges $3 per million input tokens and $5 per million output tokens, while American Anthropic charges $10 and $50 respectively. The company's low pricing has been seen as a protective moat, but the global AI industry is shifting towards profitability to recoup huge investments. DeepSeek plans to list on the stock exchange this year and must demonstrate its ability to earn money. To support its ambitions, DeepSeek aims to secure at least 1 GW of computing power, through building a large data center in Inner Mongolia and via leases. Building a 1 GW data center in the US could cost around $50 billion, but in China costs are typically lower. DeepSeek needs additional capital to achieve these goals. Users of the V4-Flash model can access it not only directly through DeepSeek but also through partner providers who host the model on their infrastructure. Theoretically, these third-party providers could maintain more attractive prices for V4-Flash access if DeepSeek raises its tariffs too much.