Ultracheap Chinese artificial intelligence is proving to be a major threat to the shaky economics of Silicon Valley. But the same price war is becoming just as risky for China’s own AI sector.

After warning customers to expect a significant increase in pricing for its services, DeepSeek recently unveiled new rates for its latest V4-Pro and V4-Flash models. The new structure, broken down by peak and off-peak access, marks a sharp jump, with some charges multiple times higher than before.

Does this hike mean the brutal race to the bottom is finally easing? Probably not. Chinese firms have spent more than a year and a half proving they can make bleeding-edge models. The harder part has been figuring out how to get businesses and customers to pay for them.

There are now nearly 1,000 large-language models on offer in the country, Bloomberg Intelligence’s Robert Lea notes, with many competing on cheap tokens. That makes a sustainable competitive advantage extremely difficult to build.

DeepSeek’s increase is a positive sign, but unlikely to reverse the trend. Even as it raises rates for its application programming interface, which lets businesses access AI models through their own software, they remain relatively cheap by global standards — and hardly guarantee a sustainable path to profits. The reintroduction of higher peak-time rates........

© The Japan Times