r/investing
Z.ai’s open source GLM5.2 model is now at par with available western models. It was trained completely on Hauwei’s chips
Chinese open-source AI models on Huawei chips match Western models at 1/10th the cost, threatening NVIDIA and Meta.
- Chinese open-source models offer comparable performance at 1/10th the inference cost, rapidly capturing US market share.
- Frontier models are now trained entirely on cheaper Huawei hardware, undermining NVIDIA's pricing power and high margins.
- Massive AI capex by US companies risks becoming redundant and requiring huge write-downs due to superior free alternatives.
Chinese company Z.ai’s GLM5.2 model dropped a week back and it’s at par with the publicly available western models. The ceo says they will have Claude Mythos level model in a matter of months. Meanwhile Claude Mythos isn’t even available for most American companies at the moment.
The real kicker is this frontier level model from China was completely trained on Huawei chips.
A lot of people will cope here with “yeah they just distilled Claude”. To a certain extent looks like they did, atleast according to anthropic but people who have reviewed their paper say the company has done actually ground breaking work.
They have released this model for free, open source, MIT licence.
Their model trounces Meta’s best model. Head and shoulders above meta’s models. Now what happens to those $100s of billions of dollars meta spent on AI when a model far superior is available for free? meta should be writing a ton of those costs off as all that effort to train their model is now redundant.
The other big factor is that this frontier model was trained 100% using huawei hardware. This is awful news for NVIDIA. They command a 70% margin on their chips and have driven their US customers into an ocean of debt with their pricing. Huawei on the other hand seems to have much smaller margins and their chips cost a fraction of NVIDIA. Which means Chinese AI companies don’t need to raise and burn anywhere near the $$$ American AI companies do. All to be handed over to Jensen.
Openrouter recently showed that 50% of American customers now use Chinese open source models while 30% use American models. Just a year back, 70% of American customers used American models. It has now dropped to 30%. That’s because these Chinese models can be run at 1/10th the cost for inference. OpenAI is now considering lowering prices, while already losing $3 for $1 of compute they serve.
All signs flashing red for American AI industry. We could be approaching the last few months before financials become unavoidable.