Shares of two Chinese artificial intelligence startups continued to slide on Monday as a major model launch and aggressive pricing moves by a competitor heightened investor concern about competition and margin pressure in the AI sector.
Knowledge Atlas Tech Joint Stock, which trades as Zhipu AI (HK:2513), declined 3.4% in Hong Kong trading. MiniMax Group Inc (HK:0100) fell 10% on the session. Both companies had already recorded significant losses at the end of last week.
On Friday, the pair lost about 9% each after DeepSeek unveiled its latest open-source model, named V4. DeepSeek said V4 can perform close to rival closed-source models while requiring less computing power, according to the company announcement that preceded the market reaction.
Compounding investor unease were steep price reductions DeepSeek applied to its API suite. The firm cut the price of input caches across its entire API offering by 90%, effective immediately, and made V4 available at a 75% discount through May 5. Those moves have been interpreted in the market as potential catalysts for more aggressive price competition as Chinese developers jockey to expand user bases and market share.
API pricing and usage costs have emerged as a focal point for competition in the industry. Developers are using lower API fees and promotional pricing to attract users and broaden adoption beyond niche applications, turning platform economics into a battleground that can affect revenue and margins for multiple participants.
Beyond DeepSeek’s actions, Tencent Holdings Ltd (HK:0700) unveiled its first flagship AI model, Hy3, which was developed under the direction of a former OpenAI researcher. Tencent’s release adds another notable player to the field during a period of heightened competitive activity.
Market participants and companies will be watching whether the recent moves by DeepSeek prompt additional pricing responses from rivals, and how that dynamic influences usage growth, developer economics and the financial performance of publicly traded AI firms in Hong Kong.
Context note: The pricing decisions, model releases and share-price movements described above are those reported by the companies and reflected in market trading during the period referenced.