Chinese AI is shaking up global markets | The Business | ABC NEWS

When China’s DeepSeek sent shock waves through the technology world early last year, it raised a confronting question for America’s AI giants, could China build cutting edge artificial intelligence for a fraction of the cost?
More than a year on DeepSeek is no longer the only strong challenger.
In recent weeks, Chinese companies Z.ai (formerly known as Zhipu AI) and Moonshot AI have released new models that have made a splash on the global tech sector, upending valuations of Wall Street’s tech giants.

Analysts say Chinese leading AI models are open, and far cheaper to use that closed source models.
Open models are free to download, mainly come from Chinese developers and do not require ongoing fees every time a task is carried out. While leading closed-source models, mostly from American companies, remain controlled by their developers and are far more expensive to use.

Some Australian businesses, particularly startups and companies building AI into their products and supply chains, are taking notice. Jacky Koh, co-founder and co-CEO of Sydney-based start-up Relevance AI, has had a front row seat to this shift. His company helps businesses build AI agents that can essentially carry out tasks on their own, rather than simply respond like a chatbot. The company website shows Canva, KPMG and Autodesk are among their customers.

Until recently, Jacky said those agents were overwhelmingly powered by closed-source models from US companies such as OpenAI and Anthropic. But Jacky’s firm is now increasingly directing more work towards models it can download and operate itself, ‘open’ models including Chinese-developed GLM and Deepseek.

“Before the start of this year, I would say honestly, about five, if not 7.5 per cent of traffic were mainly in open weight models … As of right now, we’re closer to 20, if not 25 per cent.”

For US tech giants spendings hundreds of billions of dollars on AI, the rise of cheaper open models is forcing uncomfortable questions about whether they can recoup the vast amount of money spent on developing their own models.

China expert at SentinelOne, Dakota Cary says despite the commercial threat posed by China’s AI companies, when it comes to winning market share, US Frontier Labs are “quite well positioned.”
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