Baidu Inc. unfurled the Ernie X1 in direct competition with DeepSeek’s R1. Alibaba Group Holding Ltd. followed suit with its own AI agents and reasoning model upgrade. Just in the past week, Tencent Holdings Ltd. trotted out its AI blueprint and answer to the R1; Ant Group Co. shared findings on how Chinese chips can slash costs by a fifth; DeepSeek itself upgraded the V3 model. Even Meituan — best known as the world’s biggest meal-delivery service — announced it was splashing out billions of dollars on AI.
DeepSeek did more than just show the AI industry you don’t have to spend billions to build artificial intelligence (AI). It fired up a long-dormant Chinese tech industry — and now Western names from OpenAI Inc. to Nvidia Corp. may pay the price.
Since DeepSeek upstaged OpenAI in January with a powerful model that purportedly cost just several million dollars to build, China’s tech leaders have flooded the market with a rapid succession of low-cost AI services, undercutting premium offerings from the likes of OpenAI and Alphabet Inc.’s Google. Chinese 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.
