Moonshot’s Kimi K3 is drawing growing use in the United States and abroad after its July 2026 launch, with users and analysts describing Chinese AI models as cheaper, open and increasingly efficient. That’s the hard fact at the center of this story: people and companies are moving toward tools that cost less and give them more control, while the biggest tech firms and governments scramble to keep the gate closed.
San Francisco-based Raffi Krikorian, the chief technology officer at Mozilla, which runs the Firefox browser, said he switched to Kimi K3 for many of his day-to-day activities within days of the model’s launch more than a week ago. “It just seems snappier,” he said, comparing it with the more expensive Claude Fable chatbot from San Francisco company Anthropic. Before that, he had been using another Chinese model, Z.ai’s GLM-5.2, for routine tasks such as managing his calendar, documents and email. The hierarchy here is plain enough. A top tech executive is choosing a cheaper tool because the expensive one doesn’t justify its price tag.
Krikorian is among a growing number of Americans adopting Chinese AI systems, which are gaining ground around the world because they are more affordable and increasingly efficient. U.S. companies including cryptocurrency exchange Coinbase have said they’re switching to Chinese AI models to help trim costs. The models’ popularity has frustrated some U.S. tech giants, but short of an outright ban, they’re likely to keep appealing to independent software developers in the U.S. and elsewhere. The market may dress itself up as choice, but the pressure underneath is simple: lower prices beat prestige when the bills come due.
Who Has the Power
The rise of Chinese AI models comes as American-led restrictions block China from accessing some of the world’s most advanced technologies, including cutting-edge AI chips. U.S. Treasury Secretary Scott Bessent has warned more sanctions could be coming to protect American intellectual property. On Wednesday, U.S. President Donald Trump’s administration accused Moonshot of using “covert” but not necessarily illegal methods to build K3 off the back of Anthropic’s Fable. Some U.S. politicians and AI companies, including Anthropic, have accused Chinese startups of illicit “distillation” of their models to extract their technologies, a claim that Beijing rejects as “groundless.”
That’s the apparatus speaking in its own language: sanctions, restrictions, accusations, intellectual property, control. The people making and using the tools sit beneath those decisions, while the state and the firms with the biggest legal teams fight over who gets to own the future.
The rapid rise of cutting-edge Chinese AI models this year shows the China-U.S. race in AI has moved on from early last year, when Chinese startup DeepSeek shook up the U.S. technology industry and put China on the map with an AI model that performed on par with those in the U.S. but much more cheaply. The latest AI models launched by startups Z.ai, or Zhipu, in June, and Moonshot in July are nearly as intelligent as the frontier models from OpenAI and Anthropic, experts say. In July, China’s Alibaba previewed its Qwen3.8 Max AI model. In April, DeepSeek rolled out previews of its latest V4 model, challenging OpenAI’s GPT and Google’s Gemini.
Who Pays Less, Who Pays More
Those constant advances are bearing fruit. Curt Meinhold, a Greensboro, North Carolina-based technology executive and founder of digital legacy platform LilyList, said he increasingly prefers to use DeepSeek for tasks such as finding business leads or ways to generate sales. “At the end of the day, most of us, the vast majority of us, 90 plus percent, don’t need (Anthropic’s) Mythos or Fable,” Meinhold said. “Like, we just don’t need it, we need something good enough.” He also said, “The Chinese models, you know, I find them to be pretty close on code and research. If I can pay a handful of cents per million output tokens versus 30 bucks or 40 bucks or 50 bucks, then it’s good enough.”
That’s the cost pressure in one blunt quote. A handful of cents versus 30 bucks or 40 bucks or 50 bucks. The bosses of the AI economy can call it competition. The people using the systems call it survival.
Based on data over the past month, the top five most popular models on OpenRouter, a platform that tracks data across AI models, were Chinese. Estimates from Sensor Tower, a market intelligence firm, showed Kimi had more than 930,000 downloads during the week after K3’s July release, an increase of 200% from the week before. In the U.S., it was downloaded around 86,000 times, a 387% jump. K3 proved so popular that Moonshot had to temporarily suspend new subscriptions after overwhelming demand pushed its capacity close to its limits.
Still, while Chinese models are becoming serious competitors to the U.S., they lag American AI leaders across their overall, full-range capabilities, said Anastasios Angelopoulos, co-founder and CEO of Arena, a platform for evaluating AI systems. Yasir Atalan, with the Center for Strategic and International Studies, said U.S. AI firms are also looking for more options to reduce pricing, such as with cheaper alternatives of competitive models.
Most Chinese AI models are open-source, meaning anyone can examine and build on them, at a time when frontier models from U.S. companies like Anthropic and OpenAI are closed-source. Chinese model vendors are expected to leverage open-source software to promote their global usage and adoption, said Lian Jye Su, of the technology research and advisory group Omdia. As Chinese open-source models are increasingly almost as good as closed systems made by leading U.S. companies, Krikorian said, “the open frontier is becoming increasingly Chinese-built.” While the U.S. weighs restricting Chinese AI models, a group of American tech firms including Microsoft, Meta and Nvidia signed an open letter published Friday backing “open” AI models.
What They Call Competition
Other U.S. tech policies also at times give China an upper hand, some experts say. China’s Z.ai released its GLM-5.2 model in mid-June, not long after the Trump administration put export controls on Anthropic’s Fable and Mythos models, keeping them offline for more than two weeks. “Restricting an American model can immediately create an opening for a Chinese competitor,” said Arena’s Angelopoulos.
In China, people and businesses have rapidly embraced AI technologies that have prospered with state support. Chinese tech companies like Huawei and Tencent are also embedding AI in devices such as smartphones, AI glasses and humanoid robots. China is increasingly looking to dominate AI abroad, too. At a flagship technology summit in Shanghai, Chinese President Xi Jinping championed open-source AI models and the importance of promoting greater global equity, while pledging Chinese involvement in raising AI capabilities especially in developing nations.
As is true for many other industries in China, intense competition at home is driving companies to expand globally. Leading Chinese AI startups are now raising more funding to support that effort, including through public share offerings. Both China and the U.S. will want to “encourage widespread adoption of their AI ecosystems, while safeguarding technologies that could materially strengthen strategic rivals,” said Chelsey Tam, with investment research firm Morningstar. “The competition is no longer simply the United States against China; the Chinese labs are also putting a lot of pressure on one another,” Angelopoulos said.
But as is the case in the U.S., huge investments in AI have also raised concerns over sustainability of these Chinese startups. Z.ai, for example, reported its revenue surged 132% to 724 million yuan ($107 million) last year, but net loss jumped 60% to 4.7 billion yuan ($694 million).
For now, Chinese AI models will likely continue to march ahead including in the U.S. Krikorian said, “I would highly recommend anyone doing any serious AI load to at least evaluate it.”