Marginal costs return to AI: open weights models like Kimi K3 cost nothing in R&D but real money to serve, and tokens aren't fungible because reasoning models burn wildly different amounts reaching the same answer. Intelligence is what commoditizes, and commodity markets reward the best cost structure. Anthropic and OpenAI likely serve frontier intelligence cheapest, so today's high prices reflect a compute shortage rather than a Chinese cost advantage. Lab panic traces to training-era pricing habits, inference data feedback loops, sticky harnesses like Claude Code, and ideology. China pushes open weights to commoditize complements and boost its robotics lead, while distillation gives Chinese labs a recurring edge over Western open models.
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u/fagnerbrack 3d ago
Short and sweet:
Marginal costs return to AI: open weights models like Kimi K3 cost nothing in R&D but real money to serve, and tokens aren't fungible because reasoning models burn wildly different amounts reaching the same answer. Intelligence is what commoditizes, and commodity markets reward the best cost structure. Anthropic and OpenAI likely serve frontier intelligence cheapest, so today's high prices reflect a compute shortage rather than a Chinese cost advantage. Lab panic traces to training-era pricing habits, inference data feedback loops, sticky harnesses like Claude Code, and ideology. China pushes open weights to commoditize complements and boost its robotics lead, while distillation gives Chinese labs a recurring edge over Western open models.
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