Businesses are quietly switching to cheap Chinese AI models as US labs get pricier

[Reward Dragon]

A growing number of companies are experimenting with Chinese open source AI models to cut costs, even as the Trump administration frames AI development as a two country race where American labs are supposed to be unambiguously ahead. DoorDash co-founder and CTO Andy Fang said publicly on X that the company is launching an experimental terminal based ordering tool built partly around a model from Chinese startup Moonshot, which he described as better quality and cheaper cost than equivalent options from US labs

The scale of the shift is becoming visible in usage data rather than just anecdotes. OpenRouter, a platform that lets developers route requests across different AI models, reported that usage of China's DeepSeek climbed from around 9 percent to nearly 20 percent of its traffic since January, with models from MiniMax, Xiaomi and Tencent also rising. A Hugging Face study from March found Chinese open source models already accounted for 41 percent of all downloads on the platform

Cost is the driver almost every source points to. MiniMax's Victor Su-Ortiz put it simply, a lot of repetitive tasks can be handled by a model that's just as capable but has a much lower cost per token compared to leading American models, and industry analyst Kevin Crivello said every AI founder he knows is either actively switching to Chinese models or seriously considering it. Experts still generally place Chinese models six to twelve months behind the absolute frontier on raw capability, but that gap barely matters for a huge share of everyday business tasks that don't need the single smartest model available

One analyst was careful to push back on the idea that this amounts to wholesale replacement, describing it instead as companies experimenting with different models for different tasks, using an open source Chinese model for one job and Claude or GPT for another, rather than switching allegiance entirely. Genuine risks remain around data security and how these models perform in higher stakes situations, and many companies remain quietly reluctant to publicize their use of Chinese models given the political sensitivity, even as the underlying economics keep pulling more of them in that direction anyway

Businesses are experimenting with cheaper Chinese AI models as U.S. rivals get more expensivefinance.yahoo.com