Last week, DeepSeek, a Chinese AI startup, announced its R1 reasoning model, a breakthrough that changes the world of AI. DeepSeek’s model matches or even surpasses the quality of leading LLMs, but at a fraction of the training and running cost. This essentially commoditized what was once the exclusive domain of tech giants. Along with the model, DeepSeek released a detailed playbook describing how others can replicate their success, dramatically lowering the barriers to entry.
Apple Just Saved Billions
For the last few years, Apple has been criticized for lagging behind in the “LLM wars.” Analysts and journalists pointed out that while companies like OpenAI, Google, and Meta poured billions into building state-of-the-art large language models (LLMs), Apple seemed to be on the sidelines. In fact, some industry insiders went as far as to call Apple’s approach “complacent.” Yet, as it turns out, it just paid off in a way no one expected.
This breakthrough means Apple can now develop competitive AI models without the multi-billion-dollar investments previously required. By staying out of the early stages of the AI arms race, Apple may have saved billions.
Goodbye, OpenAI Partnership
Apple’s perceived weakness in AI pushed it to form a partnership with OpenAI, a move that raised eyebrows across the tech world. Critics questioned the necessity of this alliance, with some calling it a “panic move” to compensate for Apple’s lack of in-house AI capabilities. Elon Musk, for instance, openly criticized the partnership, calling it “creepy spyware” and warning against potential privacy risks.
Now, Apple has a way out. With DeepSeek’s methodologies in hand, Apple no longer needs to rely on OpenAI for cutting-edge AI. They can cheaply develop their own models tailored to their ecosystem without external dependencies. This not only gives Apple the freedom to leave the partnership if they choose but also provides significant leverage in renegotiating terms.
Efficient compute is a key advantage for Apple
Over the past year, it’s become clear that LLMs alone won’t be the ultimate differentiator in AI. Instead, the real value lies in data, user context, UI, and distribution. Apple already excels in these areas, with a massive ecosystem of devices and services that seamlessly integrate into users’ lives. But now, thanks to DeepSeek’s breakthrough, Apple has an even greater advantage.
DeepSeek’s R1 model is designed for efficient inference, meaning it can run on standard hardware rather than requiring expensive, specialized GPUs. This aligns perfectly with Apple’s strengths. Apple’s devices—from iPhones to Macs—are already optimized for high performance and energy efficiency. With this new capability, Apple can deploy powerful AI models directly on their devices, ensuring user privacy and reducing reliance on cloud-based solutions.
There have long been rumors that Apple was studying how to run LLMs locally, and now that vision can become a reality. DeepSeek’s innovations make it possible for Apple to deliver state-of-the-art AI experiences without compromising on efficiency or security. For Apple’s users, this means smarter devices that protect their data while delivering unmatched performance.
Markets React
DeepSeek’s announcement had an impact across the tech industry. Nvidia, a company synonymous with AI hardware, saw its stock plummet by 17%, wiping $589 billion off its market value. Investors reacted to the realization that LLMs no longer require the kind of specialized hardware that Nvidia’s business depends on.
Apple, on the other hand, remained unaffected. Its stock actually grew. Whether it’s caused by investors just moving their investments within a tech sector or whether investors also see that Apple might benefit more than any other company is a question for them. Whatever the reason it is, we live in exciting times and the times become more and more exciting for Apple as well.
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