(Yicai) May 23 -- Tencent Cloud and iFlytek are the latest Chinese technology giants to pitch into the price war raging in the country’s artificial intelligence market

They yesterday followed Alibaba Cloud Intelligence Group, which has slashed the prices of its large language models, and Baidu, which has made two chatbots free to businesses, in cutting their LLM fees.

Several of Tencent’s Hunyuan models are now either free or discounted, its cloud business unit said. The Hunyuan-Lite model is free, while the input and output prices of Hunyuan-Standard have been reduced by almost 88 percent and 50 percent, respectively. The price of Hunyuan-Pro has been cut by 70 percent.

IFlytek said its Spark Lite application programming interface is now free, though its top-tier Spark3.5 Max API costs CNY0.21 (3 US cents) per 10,000 tokens.

The cascade of price cuts started earlier this month. Since May 6, several LLM developers, such as High-Flyer Quant, the maker of DeepSeek, Zhipu Huazhang Technology, the developer of ChatGLM, and ByteDance, which launched Skylark chatbot last August, which is known as Doubao now, have revealed significant price cuts. On May 21, Alibaba's Alibaba Cloud said its flagship model Qwen-Long will be 97 percent cheaper to use whereas search engine giant Baidu announced that its two flagship ErnieBot models, Ernie Speed and Ernie Lite, are now free of charge.

“If one internet company cuts prices, the others have to follow or risk falling behind,” Zhang Junlin, head of research and development for new technologies at Sina Weibo, told Yicai previously. The main reason is that LLM technologies and capabilities have already converged so there are no particularly strong barriers between developers, he added.

Some LLM players will be eliminated by the price competition, Zhang predicted, adding that a further batch will likely be culled in the second half of the year.

But low prices can also promote wider usage, Zhang said. Fan Zhe, a product manager at an LLM company, agreed and said that price reductions will make it more affordable for firms to train LLMs for a wider range of application scenarios.

Nevertheless, smaller startups have taken a different approach. Moonshot.AI recently introduced tipping on a trial basis. Li Kaifu, founder and chief executive officer of Zero One Everything Technology, said on May 21 that the company does not plan to change its prices as price wars result in mutual losses.

Fu Sheng, CEO of mobile app developer Cheetah Mobile, said that big industry players are cutting prices very aggressively, using LLMs to acquire cloud users. But LLM startups do not have such an ecosystem and must seek alternative business models, he said.

Editor: Emmi Laine