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Current Affairs

OpenAI blinks in face-off with Chinese rivals, drops pricing for some models up to 80%

In a bid to defend its market share against rapidly advancing, lower-cost Chinese rivals, US artificial intelligence firm OpenAI has launched an aggressive price war,…

By Samantha Johnson / July 31, 2026
In a bid to defend its market share against rapidly advancing, lower-cost Chinese rivals, US artificial intelligence firm OpenAI has launched an aggressive price war, slashing prices for its latest GPT-5.6 model line-up by up to 80 per cent.

In a post on social media platform X on Thursday, OpenAI CEO Sam Altman announced an 80 per cent drop in developer pricing for its lightweight GPT-5.6 Luna model, bringing application programming interface (API) costs down to US$0.20 per million input tokens and US$1.20 per million output tokens.

API fees are what developers pay to integrate AI features directly into their own apps and services.

The San Francisco-based company also cut rates for its mid-tier GPT-5.6 Terra model by 20 per cent – to US$2 per million input tokens and US$12 per million output tokens – while introducing a “fast mode” for its flagship GPT-5.6 Sol that it said would boost performance speed up to 2.5 times.

The trio of models was introduced earlier this month.

OpenAI’s dramatic price cuts instantly propelled GPT-5.6 Luna into the “most attractive” tier in intelligence-per-dollar rankings by research firm Artificial Analysis, placing it above Chinese rivals such as Zhipu AI’s GLM-5.2 and MiniMax’s M3.

The move highlights mounting pressure on Western technology giants as open-weight and accessible Chinese alternatives win over international developers with aggressive pricing and rapidly improving capabilities.

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