Chinese AI firms shift to large models, raise prices

Chinese AI companies long known for cheap, decent models are changing course. According to a Chosun Ilbo report published August 9, they are adopting the American-style scaling law — maximizing performance by increasing model size — while dropping low-cost tactics in favor of price hikes and monetization.

Citing the Financial Times, the report says ByteDance is pre-training a new AI model with up to 10 trillion parameters, more than three times the scale of Moonshot AI's Kimi K3 (2.8 trillion parameters) and larger than Anthropic's top-tier Mythos 5 (about 8 trillion) and Fable 5 (about 5 trillion).

The effort is led by a roughly 2,000-person Seed team headed by Wu Yonghui, a former Google DeepMind researcher. ByteDance founder Zhang Yiming reportedly instructed the company to stop relying on distillation for short-term gains, a signal it is moving from imitating US frontier AI toward head-on original competition.

US restrictions on advanced NVIDIA GPUs long constrained Chinese compute, pushing firms toward cost-effective AI: affordable small models tailored to specific uses, distributed as open source to penetrate global markets quickly. Now, with growing confidence, they are going bigger. Moonshot AI released Kimi K3 last month, Alibaba unveiled the 2.4-trillion-parameter Qwen 3.8 Max on August 3, and the FT reports multiple Chinese research institutes are training models comparable to Anthropic's Fable 5.

Pricing is shifting too. DeepSeek, the leader in cost-effective AI, announced on August 6 that it would significantly raise API prices; its V4 Flash currently costs $0.14 per million input tokens and $0.28 per million output tokens, about 1% of Anthropic's Fable 5 pricing.

Moonshot AI now requires companies generating over $20 million in annual revenue that use its open-source Kimi K3 to sign separate contracts, including up to 30% revenue sharing as a licensing fee. An industry source said Chinese AI firms are prioritizing performance and monetization through ultra-large models and price increases, having gained confidence to move beyond low-cost strategies into mainstream competition.

The shift marks a turn from price wars to capability wars in China's AI market, and a new attempt to scale under GPU constraints. Watch next for the release cadence of ByteDance's 10-trillion-parameter model, DeepSeek's user retention after the hike, and how open-source players like Kimi K3 and Qwen evolve their business models.