Chinese AI models undercut US rivals by up to 90%, report says
A Juniper Research report says Chinese AI models cost up to 90% less to run, eroding US market share on OpenRouter as price-driven and quality-driven AI markets split.
The report examined OpenRouter, an API platform and marketplace that aggregates AI models. About 70% of workloads on OpenRouter were handled by US models from OpenAI, Google and Anthropic last year. That combined share has since fallen to roughly 30%, the report notes, indicating a clear willingness among customers to move away from US firms to cheaper alternatives.
Juniper Research says two distinct markets have begun to emerge within AI spending. In one, price-driven customers prioritize cheaper inference; in the other, quality-driven customers are willing to pay more for higher accuracy and reasoning. US companies still appear to dominate the quality-driven market, while emerging Chinese models deliver better on the price-driven front.
The report also says open-weight models are challenging the assumption that inference must be sent to a cloud provider. As many small models can now be deployed locally, cloud providers could lose out on major revenue they have experienced in recent years.
What comes next remains unclear. A growing market could allow cheaper Chinese models and higher-performance US models to coexist, but US dominance is certainly being challenged.