There was a lot of discussion this week about cheaper Chinese AI models after the release of the new Kimi K3 model. The tech media framed it primarily as the beginning of a price war. That framing seems off.
Ben Thompson’s “Who’s Afraid of Chinese Models?" piece rightfully argues that the correct result matters more than the token. Models burn different amounts of chain-of-thought tokens to reach the same conclusion.
And there might be another reason for the price difference:
Right now there is a price umbrella that is downstream of the lack of compute; I highly doubt that Chinese models are cheaper to serve on a marginal cost basis, they just seem cheaper because Anthropic and OpenAI are so supply constrained that they are charging far more than they would if there were sufficient supply to meet the demand for intelligence.