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OpenAI has promised that the cost of developing new AI models will drop after being seemingly inspired by its new low-cost Chinese rival, DeepSeek.
Late last month, DeepSeek announced its latest large language model (LLM), R1, which quickly became OpenAI’s main competitor.
Most notably, alongside being open source and having similar capabilities to ChatGPT, the Chinese firm claimed that it developed the model using weaker NVIDIA chips as per US export requirements and that it did it for only US$5.58 million.
Now, in his latest blog post, CEO Sam Altman said that the innovative capabilities of AI are set to increase and that the cost of developing those AI models will drop.
“The intelligence of an AI model roughly equals the log of the resources used to train and run it. These resources are chiefly training compute, data, and inference compute,” said Altman as the first of three observations he made about the economics of AI and its development.
“It appears that you can spend arbitrary amounts of money and get continuous and predictable gains; the scaling laws that predict this are accurate over many orders of magnitude.”
Altman’s second observation was that the cost of AI development would drop 10 times every year.
“The cost to use a given level of AI falls about 10x every 12 months, and lower prices lead to much more use.
“You can see this in the token cost from GPT-4 in early 2023 to GPT-4o in mid-2024, where the price per token dropped about 150x in that time period. Moore’s law changed the world at 2x every 18 months; this is unbelievably stronger,” he said.
Despite the cost of developing new AI, Altman said he sees no reason to stop increasing investment in the technology, observing that the “socioeconomic value of linearly increasing intelligence is super-exponential in nature”.
Altman said that this change will not be immediate but AI will create long-term changes in the very way society and the economy operate.
“We expect the impact of AGI (artificial general intelligence) to be uneven. Although some industries will change very little, scientific progress will likely be much faster than it is today; this impact of AGI may surpass everything else,” he said.
DeepSeek’s effect on Altman has not been limited to cost either. During an “Ask Me Anything” on Reddit, the CEO said OpenAI was toying with the idea of making some models open source.
“I personally think we have been on the wrong side of history here and need to figure out a different open-source strategy; not everyone at OpenAI shares this view, and it’s also not our current highest priority,” he said.
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