OpenAI has cut prices for its latest AI model lineup by up to 80%, an aggressive response to competition from lower-cost Chinese rivals. CEO Sam Altman announced the price reduction Thursday on social media platform X. The steepest cut applies to developer pricing for the lightweight GPT-5.6 Luna model, bringing API costs down to US$0.20 per million input tokens.
The move is aimed at defending OpenAI's market share as Chinese firms advance rapidly and offer cheaper alternatives.
In a separate development, a report reveals that Chinese researchers have been using models from OpenAI and Anthropic to train their own domestic AI systems. The technique, known as model distillation, uses outputs from a powerful AI to train smaller, specialized models that can be deployed locally. The report's documents show widespread use of this method, allowing Chinese developers to build capable systems at a significantly lower cost.
Together, these events underscore the growing competitive pressure on US AI companies and the ways Chinese developers are leveraging American technology.