China is beginning to do to the AI industry what it has done in nearly every other major area of the global economy: create a product that’s good enough, and sell it at a much lower price than the competition.
Driving the news: Chinese tech giant Huawei announced that it open-sourced two of its AI models as well as technology designed for its own chips that has reasoning capability similar to the leading models on the global market.
Zoom out: Huawei is just the latest Chinese company to challenge the U.S.’s lead in AI technology, intensifying a race that has become increasingly competitive.
- Outside of North America, made-in-China AI models like DeepSeek are gaining popularity as more affordable alternatives to the products made by American companies like OpenAI and Anthropic.
- The world’s largest oil company, Saudi Aramco, is reportedly using DeepSeek in its main data centre, and London-based banks HSBC and Standard Chartered are both testing it internally.
Why it matters: The U.S. has tried to curb the pace of China’s AI development through policies like export controls on chips. Meanwhile, massive investments by China’s government in building its own AI supply chain appear to be bearing fruit.
Yes, but: For now, American AI companies are holding their lead in terms of model performance and global adoption, but that may not be enough of an advantage if Chinese companies can offer significantly lower prices.—TS