Tencent, iFlytek Enter China’s AI Price War

Tencent (0700.HK) and iFlytek (002230.SZ) cut prices of large-language models (LLM) used to power ChatGPT-like chatbots on Wednesday, starting a price war between China’s biggest tech companies

The cloud division of Tencent announced that the “lite” version of its LLM, Hunyuan, was made accessible, with prices ranging from 50% to 88% reductions on more potent versions.

iFlytek announced a few hours earlier that its “Spark” LLM was either complimentary or five times less expensive than comparable products from competitors.

The cloud division of Alibaba (9988. HK), a Chinese technology conglomerate, and Baidu (9888. HK), a search engine conglomerate, reduced the prices of their LLMs on Tuesday. Bytedance took a similar action last week. 

ChatGPT-like products were introduced by Tencent and iFlytek in September, propelling Chinese technology companies towards a competition dubbed “a war of hundred models” by a Tencent executive for supremacy in generative AI within the country.

Both organizations asserted that their LLMs outperformed OpenAI’s ChatGPT, which debuted in late 2022, in specific duties. 

Best known for its voice recognition technology, iFlytek of Hefei announced that Spark Lite would be accessible to the public at no cost. In contrast, Spark Pro/Max would be available for less than 3 cents (0.21 yuan) per 10,000 tokens or units of data the LLM processes. 

The new pricing is five times less than Baidu’s Ernie 4.0 and Alibaba’s Tongyi Qwen-Max, which charge 1.2 yuan per 10,000 tokens, and Tencent’s Hunyuan Pro charges 0.2-0.9 yuan less per 10,000 tokens.

Spark Max could generate the famous novel “To Live” by Yu Hua for a total of 2.1 yuan ($0.29) since one token is equivalent to 1.5 Chinese characters in Spark, according to a statement published on the official WeChat account of iFlytek. 

($1 = 7.2393 renminbi of the Chinese yuan)