American AI is expensive. Some startups are turning to cheap Chinese models
U.S. startups are increasingly switching from expensive American AI models to cheaper Chinese alternatives like DeepSeek-V4 to manage operational costs. While American models currently lead in capability, the cost-efficiency of Chinese open-source models is driving a significant shift in the industry.
Why it matters
This trend highlights the economic pressure on AI startups and the growing global competition in the artificial intelligence sector.
SAN FRANCISCO — Flo Crivello's San Francisco-based startup, Lindy.ai, creates artificial intelligence "assistants" to manage your email and calendar. At first, the company leaned heavily on Anthropic's top-of-the-line AI models.
But in meeting after meeting with his finance guy, Crivello said, one thing became clear: "By far, our No. 1 expense was Anthropic," he said. "Like, more than payroll."
Business Is AI 'one big bubble'? Behind the tech sell-off More than payroll — for over two dozen employees. More than rent. More than for anything else. So last month, Crivello announced that Lindy had migrated 100% of its traffic to the Chinese AI model DeepSeek-V4 .
"It was just 10x cheaper," he said, adding that it had saved the company millions of dollars. "So it was a very, very simple business decision."
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