China's new AI player, Deepseek has sent ripples across the tech world since it emerged on the scene in January. DeepSeek’s AI model with its capabilities, are said to rival, and sometimes even surpass OpenAI’s ChatGPT but at a fraction of the cost. Distillation is the industry’s new buzzword and enables AI models to run with fewer resources. Now, a global race is on to create AI models that are cheaper for consumers and businesses to adopt. Theos Evgeniou, Professor of Technology and Business at INSEAD, discusses how the machine learning technique works, the immense potential of distillation in AI across industries and why it is crucial for businesses to stay ahead in AI development.