Distillation Can Make AI Models Smaller and Cheaper

The original version of this story appeared in Quanta Magazine .

The Chinese AI company DeepSeek released a chatbot earlier this year called R1, which drew a huge amount of attention. Most of it focused on the fact that a relatively small and unknown company said it had built a chatbot that rivaled the performance of those from the world’s most famous AI companies, but using a fraction of the computer power and cost. As a result, the stocks of many Western tech companies plummeted; Nvidia, which sells the chips that run leading AI models, lost more stock value in a single day than any company in history.

Some of that attention involved an element of accusation. Sources alleged that DeepSeek had obtained , without permission, knowledge from OpenAI’s proprietary o1 model