Amid the U.S. chip sanctions, Chinese artificial intelligence firms, including 01.ai, Alibaba Group Holding Ltd BABA, and ByteDance, are making strides in reducing AI costs.
What Happened: Chinese AI companies, including startups like 01.ai and DeepSeek, and giants like Alibaba, Baidu Inc BIDU, and ByteDance, are driving down AI model costs.
They are focusing on smaller data sets, hiring cheaper engineering talent, and optimizing hardware, reported the Financial Times.
These companies have cut “inference” costs—the price to generate responses from AI models—by over 90%, offering much cheaper rates compared to their Western counterparts like OpenAI, the parent company of ChatGPT.
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01.ai, led by former Google China head Lee Kai-Fu, has managed to cut inference costs by building a model that requires less computing power and optimizing its hardware.
“China’s strength is to make really affordable inference engines and then to let applications proliferate,” Lee told the publication.
Many Chinese AI companies are using a “model-of-expert” approach, which trains multiple specialized neural networks rather than a single dense model.
“China's strength is not doing the best breakthrough research that no one has done before where the budget has no limit,” stated Lee. “China's strength is to build well, build fast, build reliably and build cheap.”
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Why It Matters: This is a significant achievement, considering the challenges posed by Washington’s ban on exports of high-end Nvidia Corporation’s NVDA AI chips, which are crucial for developing advanced models in the US.
Earlier this month, it was reported that China has informally urged its companies to prioritize domestic AI chips over those from Nvidia, potentially affecting the Jensen Huang-led company’s GPU sales.
Chinese AI firms have also been making significant strides. Alibaba, for instance, launched over 100 open-source AI models last month. This move was seen as a bold step to outpace rivals both domestically and internationally.
Chinese tech giants Alibaba and Tencent have been ramping up their investments in AI startups, with nearly a third of their deals since 2023 aimed at AI startups.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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