Zhipu AI Announces Price War on Large Language Models in China's AI Market

China’s artificial intelligence (AI) market is experiencing a major shake-up as Zhipu AI, one of the country’s prominent players in the industry, announced a game-changing price war for large language models (LLMs). At an event in Beijing, Zhipu AI unveiled its GLM series of LLMs, which will now be available at a price as low as 0.1 yuan (US$0.014) per 1 million-token prompt, marking a 90% reduction from the current industry average. This move challenges the dominance of China’s Big Tech companies and demonstrates Zhipu AI’s confidence in its technological capabilities.

Zhipu AI’s Chief Executive, Zhang Peng, emphasized that this price reduction is not just a simple price war but a result of technological innovation aimed at improving customer value. “We diligently iterated the core technology of our models and improved its efficiency,” Zhang Peng stated. This development comes on the heels of Zhipu AI’s recent successful financing round, raising $400 million and valuing the start-up at $3 billion. Notably, Saudi Arabia’s Prosperity7 Ventures participated in the financing round, becoming the first known foreign firm to back a Chinese generative AI player.

Zhipu AI’s announcement introduces three new iterations of its LLM series, namely the GLM-4-Flash version, priced at 0.1 yuan per 1 million-token prompt, the GLM-4-Air at 1 yuan per 1 million tokens, and the more powerful GLM-4-Air Extreme, available at 10 yuan per 1 million tokens. The cost of Zhipu AI’s high-end GLM-4 LLM remains unchanged at 100 yuan per million tokens.

This move by Zhipu AI follows a trend in the Chinese AI market, as several Big Tech firms have recently reduced prices on their AI models. This price war reflects the growing adoption of generative AI tools by various companies, including start-ups, Big Tech firms, and state-owned enterprises, in their pursuit of improved productivity and efficiency. Tencent Holdings, iFlytek, Alibaba Group Holding, and Baidu are among the early investors in Zhipu AI and have also previously launched their own discounts on AI models.

Zhipu AI’s entrance into the price war echoes the earlier introduction of ByteDance’s Doubao LLM family, which boasted prices 99.8% lower than OpenAI’s GPT-4 model. While this price competition is causing excitement in the market, other AI unicorns like Baichuan have cautioned against a deepening LLM price war and its potential consequences.

Zhipu AI, alongside Baichuan, Moonshot AI, and MiniMax, is part of an elite group known as China’s four AI tigers. These companies are at the forefront of AI development, constantly pushing the boundaries of innovation and competition in the Chinese market. With Zhipu AI’s disruptive move, the landscape of the Chinese AI market is set to undergo further transformation, benefiting businesses and consumers alike.