Too much of a good thing can become poison, as DeepSeek appears to be finding out now after it nipped OpenAI's nascent price war in the bud by aggressively cutting the price of its V4 Flash model, unleashing a demand tsunami that its infrastructure simply can't keep up with.
As we detailed recently, OpenAI launched a literal price war a few days back by discounting its GPT-5.6 Luna by as much as 80 percent , with input tokens now priced at just $0.2 per 1 million from their earlier perch at $1, and output tokens priced at just $1.20 per 1 million vs. the earlier price of $6.
Even though OpenAI claimed at the time that it was able to implement this steep discount after extracting additional architectural efficiencies from its models, most interpreted the move as its opening gambit in a price war aimed at China's AI labs.
Just hours later, however, DeepSeek launched a refreshed version of its latest Flash-class model, dubbed the V4 Flash 0731. Critically, the model has just 284 billion parameters and yet offers a performance that is similar to Anthropic's Opus 4.8, which is widely believed to span multi-trillion parameters!
And, in what went right to the heart of OpenAI's price war, DeepSeek priced the V4 Flash 0731 at just $0.14 per 1 million tokens of input , and $0.28 per 1 million tokens of output, eviscerating any comparative price advantage that OpenAI tried to garner with its discounting move.
Today, however, DeepSeek has started informing its customers that its API prices are all set for a "significant increase." While the AI lab has given no reason for this aberrant move - which would only affect API pricing and not customers who run these open-weight models on their own infrastructure - the word on the street is that the company is currently contending with an unprecedented demand surge, especially amid anecdotes that suggest its models' inference speeds slow down to a crawl at times, which is wholly understandable given the lab's limited compute footprint of just around 20,000 NVIDIA H100 GPUs .
Perhaps DeepSeek has bitten off more than what it can chew at this time, giving OpenAI a much-needed win in its nascent price war.
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