Tencent and iFlytek enter China's AI language model price war

Appliance and Electronics World Expo (AWE) in Shanghai

By Eduardo Baptista

BEIJING (Reuters) -China's most valuable internet company Tencent and artificial intelligence (AI) firm iFlytek on Wednesday slashed prices of large-language models(LLM) used to power ChatGPT-like chatbots, entering a brewing price war between some of the country's biggest tech companies.

Tencent's cloud unit said the "lite" version of its LLM, Hunyuan, was now free, while prices of more powerful versions were cut by between 50% and 88%. A few hours prior, iFlytek said its "Spark" LLM was either free or five times cheaper than similar products from competitors.

On Tuesday, the cloud unit of Chinese tech giant Alibaba and search engine conglomerate Baidu slashed prices of their LLMs, and Bytedance made a similar move last week.

Tencent and iFlytek launched ChatGPT-like products in September, joining a race between Chinese tech firms to become the country's generative AI champion which a Tencent executive dubbed "a war of hundred models".

Both companies claimed at the time that their LLMs performed better in some tasks than U.S.-based OpenAI's ChatGPT, which debuted in late 2022.

Hefei-based iFlytek, best known for its voice recognition technology, said Spark Lite would be free for the public to use while Spark Pro/Max would cost only 0.21 yuan, or less than 3 cents, per 10,000 tokens, or units of data processed by the LLM.

The new pricing is five times cheaper than the 1.2 yuan per 10,000 tokens charged by Baidu's Ernie 4.0 and Alibaba's Tongyi Qwen-Max, while Tencent's Hunyuan pro is 0.2-0.9 yuan cheaper per 10,000 tokens.

One token is equivalent to 1.5 Chinese characters in Spark, meaning 2.1 yuan ($0.29) was enough for Spark Max to generate all of Yu Hua's popular novel "To Live", according to a statement published on iFlytek's official WeChat account.

($1 = 7.2393 Chinese yuan renminbi)

(Reporting by Eduardo Baptista; Editing by Lincoln Feast, Kirsten Donovan)