Summary of Conference Call Notes Industry Overview - The discussion revolves around the AI computing power industry, specifically focusing on the DeepSeek V3/R1 inference system and its implications for major cloud service providers like Alibaba Cloud, Huawei Cloud, and Tencent Cloud [1][2][3]. Key Points and Arguments - **DeepSeek V3/R1 System Performance**: The DeepSeek V3/R1 inference system has a daily average cost of $87,072, assuming a GPU rental cost of $2 per hour. The theoretical daily revenue can reach $562,027, resulting in an extraordinary profit margin of 545% [1]. - **Engineering Optimization**: The system optimizes limited computing power cards to significantly increase throughput and reduce latency. This includes three major open-source technologies: Expert Parallel (EP), Computation Communication Overlap, and Distributed File System 3FS [1]. - **Impact of Open Source Technologies**: The open-sourcing of these technologies has led to significant breakthroughs in the AI computing power supply chain, allowing large companies to enhance their Return on Invested Capital (ROIC) while enabling smaller teams and startups to access valuable data insights more easily [2]. - **Profitability Assumptions**: The 545% profit margin is based on ideal conditions, including full capacity and a 100% API payment rate, without considering redundancy issues in cloud services. Under a 3:1 redundancy assumption and varying payment rates, cloud providers could achieve profitability ranging from 4.3% to 93% [2]. - **Increased API Call Volume**: The introduction of DeepSeek has led to a 3-4 times increase in token calls on Tencent Cloud, with similar trends observed on Alibaba Cloud, indicating a substantial rise in demand for AI services [3]. - **Demand vs. Efficiency**: The growth in demand for AI services is significantly outpacing the improvements in efficiency, suggesting a robust market for AI computing power in the medium to long term [4]. Additional Important Insights - **Market Dynamics**: The discussion highlights the competitive landscape among major cloud service providers, emphasizing the need for them to increase their payment rates to improve profitability [2]. - **Jevons Paradox**: The anticipated increase in API call volume will likely drive up the demand for chips and servers, aligning with Jevons' Law, which states that as technology improves efficiency, overall consumption can increase [3].