Beijing, China – Luchen Technology is a leading AI infrastructure company. It has become the first firm to officially discontinue the use of the Deepseek API. They also abandoned its associated cost structure. The announcement was made on March 1. It comes just days after Deepseek revealed a theoretical profit margin of 545% for its online system. This raises questions about the sustainability of its pricing model for third-party providers.
Luchen Technology announced that the Deepseek API will be phased out within a week. They urge users to utilize their remaining balances before the service is discontinued. The company did not explicitly disclose the reasons for this decision. However, industry reports suggest that high operational costs played a significant role.
High Costs Strain Third-Party Providers
Sina Tech, a prominent Chinese tech news outlet, reported on Deepseek’s resources. These open resources for inferential components have created financial challenges for smaller cloud service providers. In a Weibo post, Sina Tech highlighted the difficulties third-party providers face. It is challenging to balance these costs despite Deepseek’s impressive profit margins.
Luchen’s founder, You Yang, publicly criticized Deepseek’s pricing structure, emphasizing the financial strain it places on smaller companies. “The current cost model is unsustainable for many providers in the ecosystem,” Yang stated. He called for more equitable pricing strategies in the AI infrastructure sector.
Industry Implications
Luchen’s decision to drop the Deepseek API has sparked a broader debate. This debate is about the affordability and accessibility of AI infrastructure tools. As AI adoption grows, the financial burden on smaller providers could hinder innovation and competition in the industry.
Deepseek’s 545% profit margin, while impressive, has raised concerns about the balance between profitability and support for the broader ecosystem. Analysts suggest that this move by Luchen Technology could prompt other companies to reevaluate their reliance on Deepseek’s services. These companies might explore alternative solutions.
What’s Next?
Luchen Technology is transitioning away from the Deepseek API. The company is expected to explore alternative infrastructure solutions. These solutions will meet its operational needs. Meanwhile, the industry will be watching closely. It wants to see how Deepseek responds to the criticism. The industry also wants to see if Deepseek adjusts its pricing model. This adjustment would better support third-party providers.
