Chinese AI drives price competition at US labs

Chinese AI models are pushing price competition among large US artificial intelligence labs, as users and developers compare cheaper open-source systems with costlier models from OpenAI and Anthropic.

OpenAI has cut fees by 80 percent for its latest lightweight model, Luna, while Anthropic has introduced a model that approaches its most powerful system's performance at half the price. Smaller US rivals are also cutting costs, with Elon Musk's xAI reducing prices for some Grok models and Meta releasing a low-cost option called Muse Spark 1.2.

At the same time, some Chinese AI companies are raising prices as their models gain global use. DeepSeek, whose V4 Flash tops the usage leaderboard on the technical platform OpenRouter, said last week it planned a “significant increase” in prices for programmers.

In Beijing's Zhongguancun district, AGI Bar owner Song De offers customers free AI tokens from two Nvidia workstations that self-host DeepSeek V4 Flash. Song said he provides free tokens in the same way bars often provide free Wi-Fi.

Technology analyst Jack Gold said cheaper and smaller models can handle many tasks, especially as AI agents run more locally. He said OpenAI and Anthropic face pressure to show profit as they prepare to go public, and described the market as price competition rather than a full price war.

Wang Tiezhen, an independent AI consultant and former head of APAC ecosystem at HuggingFace, said open-source models are closing the performance gap with closed systems faster than expected. Leo Feng of Cola.APP said price cuts may lead to a boom in downstream applications, while Max Liu of LobeHub said cheaper AI is good for the world.