Mass Migration to China Triggers Price Cuts from US Tech Giant
The US-based AI giant, OpenAI, has officially reduced the prices of its entry-level and mid-tier models. This price adjustment comes amid a growing trend of US companies switching to Artificial Intelligence (AI) models developed in China.
OpenAI has cut the costs for the GPT-5.6 Luna model by up to 80%, while the Terra model has seen a 20% reduction. Meanwhile, the price for the Sol model remains unchanged, as reported by Reuters. This policy allows business users to pay significantly lower fees per million tokens when using the AI platform.
According to Reuters, input text costs for the Luna model have dropped to $0.20 per million tokens from the previous $1. The Terra model’s input costs have also decreased from $2.50 to $2. These price reductions also apply to output processing costs; the Luna model is now priced at $1.20, down from $6 per million tokens, while Terra has dropped from $15 to $12.
Despite these cuts, OpenAI has assured that the price reduction will not damage the company’s financial performance. The company claims it will remain profitable because these models can now complete tasks with much lower operational costs. This adjustment was made possible by increased efficiency in GPT-5.6, particularly regarding the model’s ability to optimise code and performance during internal development.
OpenAI’s new policy aligns with the views of tech industry leaders who believe low pricing is the key to widespread AI adoption. This move also responds to the rising number of US companies switching to AI models from Chinese manufacturers, such as Zai and DeepSeek.
Kyle Chan, a research associate at the John L. Thornton China Center of the Brookings Institution, stated that Chinese AI models are becoming highly attractive to US companies due to the surging costs of using US-made models. Companies are now much more focused on budget efficiency. “Previously, US companies only prioritised AI adoption. Now, they are much more conscious of the costs involved,” he explained, as quoted by CNBC International.
However, the surge in the use of Chinese AI models by US firms has drawn negative responses from policymakers in Washington. Two US Congressional committees are reportedly investigating the phenomenon. “The rise in the use of Chinese AI models by US companies raises serious concerns,” a US State Department spokesperson told CNBC International. “These AI models are designed to advance Beijing’s narrative, censor dissent, and reflect the ideology and values of the Chinese Communist Party,” they added.