What is AI distillation and what does it mean for OpenAI?

DeepSeek's development of low-cost chatbot has shaken markets

20250130 Deepseek

Investors are questioning whether DeepSeek's low-budget approach to AI could erode the dominance of U.S. tech giants in the booming sector. © Getty Images

RYOHTAROH SATOH

TOKYO -- The tech industry and stock markets have spent much of this week trying to grasp how a small, relatively unknown Chinese company was able to develop a sophisticated artificial intelligence chatbot on par with Open AI's ChatGPT at a fraction of the cost.

One possible answer being floated in tech circles is distillation, an AI training method that uses bigger "teacher" models to train smaller but faster-operating "student" models.

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