DeepSeek just made its 75% price cut on V4-Pro permanent. Xiaomi's MiMo slashed V2.5 pricing by up to 99%, effective today. Most coverage frames this as a price war. The more interesting part is the engineering that makes these numbers sustainable.

DeepSeek's V4 paper describes a *hybrid attention architecture* that attacks the core bottleneck of long-context inference: the KV cache. Traditional transformers store key-value pairs for every token in the context. At 1 million tokens, this cache alone can fill an entire GPU's memory. V4 introduces two interleaved attention types.

Compressed Sparse Attention (CSA) compresses every 4 tokens into a single KV entry, then selects only the top-k most relevant compressed blocks per query. Heavily Compressed Attention (HCA) goes further, compressing 128 tokens into one entry and running dense attention over the result. The compressed sequence is short enough that dense attention stays cheap.

V4-Pro's KV cache at 1M tokens is 10% (!!) of V3.2's. Single-token inference FLOPs drop to 27% (!!). The model has 1.6 trillion total parameters but only activates 49 billion per token through Mixture-of-Experts routing, the knowledge capacity of a massive model at the compute cost of one thirty times smaller.

MiMo's approach is different but lands in the same place. Xiaomi's team implemented Sliding Window Attention via SGLang HiCache, reducing KV cache data transfer across GPU memory, CPU memory, and SSD to roughly 1/7 (!!) of previous volume. Cacheable tokens expanded by 5x (!!). Combined with expert parallelism optimization and input length bucketing, per-token serving cost dropped enough to make permanent pricing at these levels viable.

V4-Pro now sits at $0.87 per million output tokens. MiMo V2.5-Pro at roughly $3/M output, with Flash variants far below that. A year ago, sub-dollar output pricing meant you were using a small distilled model with real capability tradeoffs. These are frontier-class reasoners with million-token context windows.

Both companies can commit to permanent cuts because the reductions come from the architecture itself. When your attention mechanism physically processes fewer FLOPs per token and your cache occupies a fraction of the memory, the cost to serve is structurally lower. The price follows the cost curve.