Core Viewpoint - The significant decline in profits is primarily due to increased cost and expense pressures, with short-term profit recovery remaining highly uncertain [3][72][74] Revenue and Profit Analysis - In May, industrial profits fell sharply by 11.9 percentage points year-on-year to 9%, with profit margins declining due to rising cost and expense pressures [3][72][74] - The cumulative revenue growth for industrial enterprises was 2.7% year-on-year, down from 3.2% previously, while cumulative profit showed a decline of 1.1% compared to a previous increase of 1.4% [2][8][71] - The actual operating income growth rate fell by 1.2 percentage points to 4.2%, contributing only 3.4% to overall profit growth [3][72][74] Cost Structure - The overall cost rate for industrial enterprises was 85.9%, an increase of 40 basis points year-on-year, with the coal and steel sectors experiencing a notable rise in cost rates [3][17][72] - The cost rate for the coal and metallurgy chain increased significantly, reflecting a rise in upstream costs due to falling coal and steel prices [3][17][72] Sector Performance - The coal and metallurgy chain's revenue growth turned negative, declining by 2.8 percentage points to -0.6% due to weak equipment updates and a slowdown in real estate infrastructure [4][73] - The petrochemical sector also saw a significant revenue decline, while the consumer manufacturing chain experienced a slight recovery, with revenue growth rising by 0.1 percentage points to 7.8% [4][73] Inventory Trends - The nominal inventory growth for industrial enterprises decreased by 0.4 percentage points to 3.5%, indicating a need for further recovery in terminal demand [6][59][74] - Actual inventory, excluding price factors, also fell by 0.1 percentage points to 7.0%, with downstream inventory growth showing a decline [6][59][74] Future Outlook - The coal and steel prices are expected to remain weak, impacting the profitability of the coal and metallurgy chain, with short-term profit recovery facing significant uncertainty [4][33][73] - Despite the challenges, the long-term trend of profit recovery remains intact, supported by ongoing domestic demand recovery [4][33][73]

Core Insights - DeepSeek claims a theoretical profit margin of 545% based on its online service's "cost-profit ratio" [1] - The company estimates a potential daily revenue of $562,027 if all usage is billed at R1 pricing, although actual revenue is significantly lower due to various factors [2] - DeepSeek's technology has gained attention by outperforming OpenAI's ChatGPT in the Apple App Store, ranking 6th in the productivity category [3] Financial Projections - The estimated daily revenue of DeepSeek is $562,027 based on R1 pricing for its V3 and R1 models [1] - The cost of leasing GPUs is reported to be $87,072, indicating a substantial gap between potential revenue and actual costs [2] - DeepSeek acknowledges that its actual income is "significantly lower" than projected due to discounts and limited commercialization of services [2] Market Position - DeepSeek's new model has been noted for matching OpenAI's performance in certain benchmarks while having a lower development cost [2] - The company faces challenges due to U.S. trade restrictions that limit access to advanced chips for Chinese firms, impacting its market potential [2] - The technology has disrupted traditional players in the AI space, evidenced by its rise in app store rankings [3]

Core Viewpoint - DeepSeek has disclosed key information regarding its model inference cost and profit margins, claiming a theoretical daily profit margin of 545% based on specific assumptions about GPU rental costs and token pricing [1][3]. Financial Performance - DeepSeek's total cost is reported to be $87,072 per day, assuming a GPU rental cost of $2 per hour. The theoretical total revenue from all tokens, calculated at DeepSeek-R1 pricing, amounts to $562,027 per day, leading to a profit margin of 545% [1][3]. - The pricing structure for DeepSeek-R1 includes $0.14 per million input tokens (cache hit), $0.55 per million input tokens (cache miss), and $2.19 per million output tokens [3]. Market Reactions - The article prompted significant discussion online, particularly regarding the profitability of DeepSeek's API services, with founder You Yang previously stating a monthly loss of 400 million yuan [2][5]. - You Yang indicated that the current state of DeepSeek API (MaaS) is not profitable due to discrepancies between testing speeds and real-world scenarios, as well as machine utilization issues [5]. Operational Insights - DeepSeek aims to optimize its V3/R1 inference systems for higher throughput and lower latency, focusing on techniques such as increasing batch size and load balancing [4]. - The company operates with a strategy of deploying full nodes during peak hours and releasing nodes for training during off-peak hours, which is seen as a response to concerns about resource utilization [5]. Open Source Initiatives - DeepSeek recently concluded a "Open Source Week," during which it announced the release of several codebases, including Fire-Flyer file system and other frameworks aimed at enhancing data processing capabilities [7][8][9][10][11]. - The cumulative downloads of the DeepSeek App have surpassed 110 million, with peak weekly active users reaching nearly 97 million, indicating strong user engagement [12].