No, nvidia's demand and importance might reduce in the long term.
We are forgetting that China has a whole hardware ecosystem. Now we learn that building SOTA models does not need SOTA hardware in massive quanties from nvidia. So the crash in the market implicitly could mean that the (hardware) monopoly of American companies is not going to be more than a few years. The hardware moat is not as deep as the West thought.
Once China brings scale like it did to batteries, EVs, solar, infrastructure, drones (etc) they will be able to run and train their models on their own hardware. Probably some time away but less time than what Wall Street thought.
This is actually more about nvidia than about OpenAI. OpenAI owns the end interface and it will be generally safe (maybe at a smaller valuation). In the long term nvidia is more replaceable than you think it is. Inference is going to dominate the market -- its going to be cerebras, groq, amd, intel, nvidia, google TPUs, chinese TPUs etc.
On the training side, there will be less demand for nvidia GPUs as meta, google, microsoft etc. extract efficiencies with the GPUs they already have given the embarrasing success of DeepSeek. Now, China might have been another insatiable market for nvidia but the export controls have ensured that it wont be.
>On the training side, there will be less demand for nvidia GPUs as meta, google, microsoft etc. extract efficiencies with the GPUs they already have given the embarrasing success of DeepSeek. Now, China might have been another insatiable market for nvidia but the export controls have ensured that it wont be.
Why? If DeepSeek made training 10x more efficient, just train a 10x bigger model. The end goal is AGI.
You are assuming that a 10x bigger model will be 10x better or will bring us close to AGI. It might be too unweildy to do inference on. Or the gain in performance maybe minor and more scientific thought needs to go into the model before it can reap the reward with more training. Scientific breakthroughts sometimes take time.
I’m not assuming 10x bigger will yield 10x better. We have scaling laws that can tell you more.
But I find it bizarre that you made the conclusion that AI has stopped scaling because DeepSeek optimized the heck out of the sanctioned GPUs they had. Weird.
I have not said that. I simply said that you now know that you can get more juice for the amount you spend. If you’ve just learnt this you would now first ask your engineers to improve your model to scale it rather than place any further orders with nvidia to scale it. Only once you think you have got the most out of the existing GPUs you would buy more. DeepSeek have made people wonder if their engineers have missed some more stuff and maybe they should just pause spending to make sure before sinking in more billions. It breaks the hegemony of the spend more to dominate attitude that was gripping the industry e.g $500 billion planned spend by openAI consortium etc
It doesn’t break the attitude. The number one problem DeepSeek’s CEO stated in an interview is they don’t have access to more advanced GPUs. They’re GPU starved.
There’s no reason why American companies can’t use DeepSeek’s techniques to improve their efficiency but continue the GPU arms race to AGI.
We are forgetting that China has a whole hardware ecosystem. Now we learn that building SOTA models does not need SOTA hardware in massive quanties from nvidia. So the crash in the market implicitly could mean that the (hardware) monopoly of American companies is not going to be more than a few years. The hardware moat is not as deep as the West thought.
Once China brings scale like it did to batteries, EVs, solar, infrastructure, drones (etc) they will be able to run and train their models on their own hardware. Probably some time away but less time than what Wall Street thought.
This is actually more about nvidia than about OpenAI. OpenAI owns the end interface and it will be generally safe (maybe at a smaller valuation). In the long term nvidia is more replaceable than you think it is. Inference is going to dominate the market -- its going to be cerebras, groq, amd, intel, nvidia, google TPUs, chinese TPUs etc.
On the training side, there will be less demand for nvidia GPUs as meta, google, microsoft etc. extract efficiencies with the GPUs they already have given the embarrasing success of DeepSeek. Now, China might have been another insatiable market for nvidia but the export controls have ensured that it wont be.