Odd Lots · Saturday, June 27, 2026
Winston Chang suggested that Chinese AI companies may have a cost advantage due to intense domestic competition ('involution') and navigating chip supply constraints. He cited anecdotal evidence of significantly lower token generation costs in China compared to the US, suggesting that survival in this competitive landscape breeds strong, efficient competitors.
“And in terms of how the US and Chinese tech stact today are differentiated, or AI companies are differentiated today, obviously because of the restrictions. I know that probably the most efficient compute today is probably from the US chip company. So obviously the chip availability is something that the Chinese AI companies probably have to work with, but in that way they probably managed to produce at much lower costs and very efficiently as well.”
“So I think from that perspective, right as I said, human beings or companies. And if you really think about the Darwinism in economic theories, the free markets create the hot, tapest competitors and the most healthy competitors. So I think in China, for those that compete in such a there's a word called involution in China. Involution it only happens in China market. So if they can survive within their cutthrow market under the constraints of the chip supply, they are pretty anywhere, they are pretty strong.”
“So I think from that perspective, right as I said, human beings or companies. And if you really think about the Darwinism in economic theories, the free markets create the hot, tapest competitors and the most healthy competitors. So I think in China, for those that compete in such a there's a word called involution in China. Involution it only happens in China market. So if they can survive within their cutthrow market under the constraints of the chip supply, they are pretty anywhere, they are pretty strong.”