The Prof G Pod with Scott Galloway China Decode: How an AI Price War Could Spark a Market Correction
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Nov 18, 2025 Explore how China is creating a low-cost AI revolution, outpacing pricier U.S. models. Dive into the implications of a brewing AI price war and its potential to trigger a market correction. Tensions between China and Japan over Taiwan escalate, raising questions about the balance of power in East Asia. Meanwhile, Starbucks struggles in China’s competitive coffee market, relinquishing majority control to local rivals. Discover why Western brands are faltering and the strategies that might help them reclaim relevance.
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China's Lean AI Undercuts US Spending
- China is building lower-cost, open-weight AI models that match or approach US performance while dramatically cutting training and inference costs.
- This pricing and openness drives US companies and governments to consider Chinese models despite security concerns.
Price Wars Could Reshape Global AI Standards
- A price war in Chinese AI could trigger a global shift where cash-constrained countries standardize on cheaper Chinese models.
- Eric Schmidt warned many countries may adopt Chinese models simply because they're free, not because they're superior.
Architecture Tricks Deliver Big Efficiency Gains
- Chinese models evolve different architectures like mixture-of-experts to gain efficiency while remaining massive in parameter count.
- Kimi K2 uses >1 trillion parameters but activates only about 32 billion per query to cut compute costs.
