Simon Willison’s Weblog

The impact of competition and DeepSeek on Nvidia (via) Long, excellent piece by Jeffrey Emanuel capturing the current state of the AI/LLM industry. The original title is "The Short Case for Nvidia Stock" - I'm using the Hacker News alternative title here, but even that I feel under-sells this essay.

Jeffrey has a rare combination of experience in both computer science and investment analysis. He combines both worlds here, evaluating NVIDIA's challenges by providing deep insight into a whole host of relevant and interesting topics.

As Jeffrey describes it, NVIDA's moat has four components: high-quality Linux drivers, CUDA as an industry standard, the fast GPU interconnect technology they acquired from Mellanox in 2019 and the flywheel effect where they can invest their enormous profits (75-90% margin in some cases!) into more R&D.

Each of these is under threat.

Technologies like MLX, Triton and JAX are undermining the CUDA advantage by making it easier for ML developers to target multiple backends - plus LLMs themselves are getting capable enough to help port things to alternative architectures.

GPU interconnect helps multiple GPUs work together on tasks like model training. Companies like Cerebras are developing enormous chips that can get way more done on a single chip.

Those 75-90% margins provide a huge incentive for other companies to catch up - including the customers who spend the most on NVIDIA at the moment - Microsoft, Amazon, Meta, Google, Apple - all of whom have their own internal silicon projects:

Now, it's no secret that there is a strong power law distribution of Nvidia's hyper-scaler customer base, with the top handful of customers representing the lion's share of high-margin revenue. How should one think about the future of this business when literally every single one of these VIP customers is building their own custom chips specifically for AI training and inference?

The real joy of this article is the way it describes technical details of modern LLMs in a relatively accessible manner. I love this description of the inference-scaling tricks used by O1 and R1, compared to traditional transformers:

Basically, the way Transformers work in terms of predicting the next token at each step is that, if they start out on a bad "path" in their initial response, they become almost like a prevaricating child who tries to spin a yarn about why they are actually correct, even if they should have realized mid-stream using common sense that what they are saying couldn't possibly be correct.

Because the models are always seeking to be internally consistent and to have each successive generated token flow naturally from the preceding tokens and context, it's very hard for them to course-correct and backtrack. By breaking the inference process into what is effectively many intermediate stages, they can try lots of different things and see what's working and keep trying to course-correct and try other approaches until they can reach a fairly high threshold of confidence that they aren't talking nonsense.

The last quarter of the article talks about the seismic waves rocking the industry right now caused by DeepSeek v3 and R1. v3 remains the top-ranked open weights model, despite being around 45x more efficient in training than its competition: bad news if you are selling GPUs! R1 represents another huge breakthrough in efficiency both for training and for inference - the DeepSeek R1 API is currently 27x cheaper than OpenAI's o1, for a similar level of quality.

Jeffrey summarized some of the key ideas from the v3 paper like this:

A major innovation is their sophisticated mixed-precision training framework that lets them use 8-bit floating point numbers (FP8) throughout the entire training process. [...]

DeepSeek cracked this problem by developing a clever system that breaks numbers into small tiles for activations and blocks for weights, and strategically uses high-precision calculations at key points in the network. Unlike other labs that train in high precision and then compress later (losing some quality in the process), DeepSeek's native FP8 approach means they get the massive memory savings without compromising performance. When you're training across thousands of GPUs, this dramatic reduction in memory requirements per GPU translates into needing far fewer GPUs overall.

Then for R1:

With R1, DeepSeek essentially cracked one of the holy grails of AI: getting models to reason step-by-step without relying on massive supervised datasets. Their DeepSeek-R1-Zero experiment showed something remarkable: using pure reinforcement learning with carefully crafted reward functions, they managed to get models to develop sophisticated reasoning capabilities completely autonomously. This wasn't just about solving problems— the model organically learned to generate long chains of thought, self-verify its work, and allocate more computation time to harder problems.

The technical breakthrough here was their novel approach to reward modeling. Rather than using complex neural reward models that can lead to "reward hacking" (where the model finds bogus ways to boost their rewards that don't actually lead to better real-world model performance), they developed a clever rule-based system that combines accuracy rewards (verifying final answers) with format rewards (encouraging structured thinking). This simpler approach turned out to be more robust and scalable than the process-based reward models that others have tried.

This article is packed with insights like that - it's worth spending the time absorbing the whole thing.

# 27th January 2025, 1:55 am / cerebras, nvidia, generative-ai, deepseek, ai, llms, mlx, inference-scaling

Anomalous Tokens in DeepSeek-V3 and r1. Glitch tokens (previously) are tokens or strings that trigger strange behavior in LLMs, hinting at oddities in their tokenizers or model weights.

Here's a fun exploration of them across DeepSeek v3 and R1. The DeepSeek vocabulary has 128,000 tokens (similar in size to Llama 3). The simplest way to check for glitches is like this:

System: Repeat the requested string and nothing else.
User: Repeat the following: "{token}"

This turned up some interesting and weird issues. The token ' Nameeee' for example (note the leading space character) was variously mistaken for emoji or even a mathematical expression.

# 26th January 2025, 9:34 pm / deepseek, llms, ai, generative-ai

r1.py script to run R1 with a min-thinking-tokens parameter (via) Fantastically creative hack by Theia Vogel. The DeepSeek R1 family of models output their chain of thought inside a <think>...</think> block. Theia found that you can intercept that closing </think> and replace it with "Wait, but" or "So" or "Hmm" and trick the model into extending its thought process, producing better solutions!

You can stop doing this after a few iterations, or you can keep on denying the </think> string and effectively force the model to "think" forever.

Theia's code here works against Hugging Face transformers but I'm confident the same approach could be ported to llama.cpp or MLX.

# 22nd January 2025, 4:48 pm / generative-ai, deepseek, transformers, ai, llms

Run DeepSeek R1 or V3 with MLX Distributed (via) Handy detailed instructions from Awni Hannun on running the enormous DeepSeek R1 or v3 models on a cluster of Macs using the distributed communication feature of Apple's MLX library.

DeepSeek R1 quantized to 4-bit requires 450GB in aggregate RAM, which can be achieved by a cluster of three 192 GB M2 Ultras ($16,797 will buy you three 192GB Apple M2 Ultra Mac Studios at $5,599 each).

# 22nd January 2025, 4:15 am / apple, generative-ai, mlx, deepseek, ai, llms

DeepSeek API Docs: Rate Limit. This is surprising: DeepSeek offer the only hosted LLM API I've seen that doesn't implement rate limits:

DeepSeek API does NOT constrain user's rate limit. We will try out best to serve every request.

However, please note that when our servers are under high traffic pressure, your requests may take some time to receive a response from the server.

Want to run a prompt against 10,000 items? With DeepSeek you can theoretically fire up 100s of parallel requests and crunch through that data in almost no time at all.

As more companies start building systems that rely on LLM prompts for large scale data extraction and manipulation I expect high rate limits will become a key competitive differentiator between the different platforms.

# 18th January 2025, 6:24 pm / rate-limiting, generative-ai, deepseek, ai, llms

Timeline of AI model releases in 2024 (via) VB assembled this detailed timeline of every significant AI model release in 2024, for both API and open weight models.

I'd hoped to include something like this in my 2024 review - I'm glad I didn't bother, because VB's is way better than anything I had planned.

VB built it with assistance from DeepSeek v3, incorporating data from this Artificial Intelligence Timeline project by NHLOCAL. The source code (pleasingly simple HTML, CSS and a tiny bit of JavaScript) is on GitHub.

# 31st December 2024, 8:58 pm / ai-assisted-programming, generative-ai, deepseek, ai, llms

DeepSeek_V3.pdf (via) The DeepSeek v3 paper (and model card) are out, after yesterday's mysterious release of the undocumented model weights.

Plenty of interesting details in here. The model pre-trained on 14.8 trillion "high-quality and diverse tokens" (not otherwise documented).

Following this, we conduct post-training, including Supervised Fine-Tuning (SFT) and Reinforcement Learning (RL) on the base model of DeepSeek-V3, to align it with human preferences and further unlock its potential. During the post-training stage, we distill the reasoning capability from the DeepSeek-R1 series of models, and meanwhile carefully maintain the balance between model accuracy and generation length.

By far the most interesting detail though is how much the training cost. DeepSeek v3 trained on 2,788,000 H800 GPU hours at an estimated cost of $5,576,000. For comparison, Meta AI's Llama 3.1 405B (smaller than DeepSeek v3's 685B parameters) trained on 11x that - 30,840,000 GPU hours, also on 15 trillion tokens.

DeepSeek v3 benchmarks comparably to Claude 3.5 Sonnet, indicating that it's now possible to train a frontier-class model (at least for the 2024 version of the frontier) for less than $6 million!

Andrej Karpathy:

For reference, this level of capability is supposed to require clusters of closer to 16K GPUs, the ones being brought up today are more around 100K GPUs. E.g. Llama 3 405B used 30.8M GPU-hours, while DeepSeek-V3 looks to be a stronger model at only 2.8M GPU-hours (~11X less compute). If the model also passes vibe checks (e.g. LLM arena rankings are ongoing, my few quick tests went well so far) it will be a highly impressive display of research and engineering under resource constraints.

DeepSeek also announced their API pricing. From February 8th onwards:

Input: $0.27/million tokens ($0.07/million tokens with cache hits)
Output: $1.10/million tokens

Claude 3.5 Sonnet is currently $3/million for input and $15/million for output, so if the models are indeed of equivalent quality this is a dramatic new twist in the ongoing LLM pricing wars.

# 26th December 2024, 6:49 pm / deepseek, training-data, llms, ai, generative-ai, llm-pricing, llama, meta, andrej-karpathy

deepseek-ai/DeepSeek-V3-Base (via) No model card or announcement yet, but this new model release from Chinese AI lab DeepSeek (an arm of Chinese hedge fund High-Flyer) looks very significant.

It's a huge model - 685B parameters, 687.9 GB on disk (TIL how to size a git-lfs repo). The architecture is a Mixture of Experts with 256 experts, using 8 per token.

For comparison, Meta AI's largest released model is their Llama 3.1 model with 405B parameters.

The new model is apparently available to some people via both chat.deepseek.com and the DeepSeek API as part of a staged rollout.

Paul Gauthier got API access and used it to update his new Aider Polyglot leaderboard - DeepSeek v3 preview scored 48.4%, putting it in second place behind o1-2024-12-17 (high) and in front of both claude-3-5-sonnet-20241022 and gemini-exp-1206!

I never know if I can believe models or not (the first time I asked "what model are you?" it claimed to be "based on OpenAI's GPT-4 architecture"), but I just got this result using LLM and the llm-deepseek plugin:

llm -m deepseek-chat 'what deepseek model are you?'

I'm DeepSeek-V3 created exclusively by DeepSeek. I'm an AI assistant, and I'm at your service! Feel free to ask me anything you'd like. I'll do my best to assist you.

Here's my initial experiment log.

# 25th December 2024, 7 pm / aider, hugging-face, generative-ai, ai, llms, deepseek, paul-gauthier

DeepSeek API introduces Context Caching on Disk (via) I wrote about Claude prompt caching this morning. It turns out Chinese LLM lab DeepSeek released their own implementation of context caching a couple of weeks ago, with the simplest possible pricing model: it's just turned on by default for all users.

When duplicate inputs are detected, the repeated parts are retrieved from the cache, bypassing the need for recomputation. This not only reduces service latency but also significantly cuts down on overall usage costs.

For cache hits, DeepSeek charges $0.014 per million tokens, slashing API costs by up to 90%.

[...]

The disk caching service is now available for all users, requiring no code or interface changes. The cache service runs automatically, and billing is based on actual cache hits.

DeepSeek currently offer two frontier models, DeepSeek-V2 and DeepSeek-Coder-V2, both of which can be run as open weights models or accessed via their API.

# 14th August 2024, 8:48 pm / llms, ai, generative-ai, deepseek, prompt-caching