companies have in past years squeezed out global rivals in industries as varied as electric vehicles and solar panels, by out-manufacturing and undercutting their competitors. The pattern may be replicating itself in AI.
“China is trying to do to AI what they always do: study, copy, optimize, and then bankrupt everyone with low prices and enormous scale.”
companies have in the past two weeks rolled out no fewer than 10 major product updates or releases — and that’s just the big names.
Baidu unfurled the Ernie X1 in direct competition with DeepSeek’s R1. Alibaba followed suit with its own AI agents and reasoning model upgrade. Just in the past week, Tencent trotted out its AI blueprint and answer to the R1; Ant Group shared findings on how Chinese chips can slash costs by a fifth; DeepSeek itself upgraded the V3 model. Even Meituan — the world’s biggest meal-delivery service — announced it’s splashing out billions of $$$ on AI.
We’re about to see a trend toward significant margin compression for companies throughout the ecosystem. Not just AI model builders, but the large AI enablers that are also driving the growth of the industry.
At the same time, the cloud providers that host AI development are slashing prices — a competition that threatens to spill beyond its borders.
Some expect the parade of open-source models to spill over into adjacent fields from computer vision to robotics and image generation in coming months.
With China’s strength in hardware, the cheaper and more accessible the AI models, the more the demand for devices powered by AI.
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