Industry pioneer declares that Chinese AI challenger spending 2 percent of ChatGPT’s budget

(MENAFN) Artificial intelligence pioneer Kai-Fu Lee has raised concerns about the long-term viability of OpenAI, noting that its Chinese competitor, DeepSeek, operates at a fraction of the cost while gaining rapid popularity.

DeepSeek intensified the AI race between China and the U.S. in January by launching an open-source reasoning AI model, R1. Unlike ChatGPT, which requires a subscription, DeepSeek is freely available, making it one of the most downloaded apps on Apple’s and Google’s platforms.

In an interview with Bloomberg on Thursday, Lee highlighted the stark difference in operating costs. "If OpenAI’s expenses reached $7 billion in 2024, DeepSeek is likely running on just 2% of that budget," he said. He further claimed that OpenAI was losing $87 billion annually, questioning whether its business model is sustainable in the long run.

Lee, the founder of Sinovation Ventures and a veteran in AI research, has worked with Microsoft, Google, and Apple. He suggested that OpenAI CEO Sam Altman likely faces pressure from cost-effective competitors like DeepSeek.

The investor and founder of 01.AI predicted that only a few AI firms would dominate China’s evolving landscape, naming DeepSeek, Alibaba, and ByteDance as the likely survivors. Meanwhile, in the U.S., he identified OpenAI, xAI, Google, and Anthropic as key players.

Lee also pointed out that generative AI models, such as ChatGPT, have become commoditized, making OpenAI’s business strategy vulnerable to competition from lower-cost, open-source alternatives like DeepSeek.

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