China gains ground in open AI race, but can its models turn adoption into revenue?

Nvidia is moving beyond chips into AI model gateways, while Chinese models are expanding their global reach, as competition shifts to other areas

By Lee Shih Ta

Chip giant Nvidia’s (NVDA.US) new agreement to acquire Hugging Face for $12.93 billion is much more than the purchase of a website that hosts AI models. Nvidia has long dominated the AI chip market and the Cuda software ecosystem, while Hugging Face connects more than 18 million developers and about 200,000 companies with over 3 million models. If completed, the transaction will take Nvidia beyond its roots in computing infrastructure into model discovery, testing, downloading and deployment, bringing it closer to the gateway where companies decide which models to use and where to run them.

Nvidia’s move is not isolated. Microsoft (MSFT.US) offers more than 11,000 models through Microsoft Foundry, while Amazon’s (AMZN.US) Bedrock and Alphabet’s (GOOG.US) Google Model Garden also combine models, development tools and cloud services into enterprise deployment platforms. Meta (META.US), meanwhile, is using its open-weight Llama models to expand its developer ecosystem. The technology giants are pursuing different strategies, but the competition has expanded beyond model capabilities to developers, computing power and enterprise deployment gateways.

Chinese open-weight models are emerging as key players in this shift. A report released by Hugging Face in March showed that models developed in China accounted for 41% of downloads on its platform over the past year, surpassing the share of U.S. models. The Qwen family of models from Alibaba (9988.HK; BABA.US) has spawned more than 113,000 derivatives, exceeding the combined total for Google and Meta. Models including DeepSeek, Qwen, GLM from Z.AI (2513.HK), Kimi from Moonshot AI and those from MiniMax (0100.HK) are increasingly being used by developers for fine-tuning, compression and redeployment, with some beginning to serve as the technical backbone of overseas projects.

Chinese companies primarily provide foundation models, Hugging Face connects models with developers, and Nvidia supplies chips and development tools. The three do not compete directly, but collectively influence how companies adopt and deploy models, while everyone seeks to capture developers, customer relationships and revenue within the industry’s value chain.

From downloads to overseas projects

Humain, an AI company under Saudi Arabia’s Public Investment Fund, recently unveiled the Arabic-language humain-m3 model. Built on MiniMax-M3, the model was further pre-trained on more than 1 trillion native Arabic tokens and has 428 billion parameters. It is currently available in research preview on the Humain Node. Humain plans to make the model weights available after completing safety training and alignment.

For Saudi Arabia, adopting an existing Chinese model as its foundation can help Humain shorten development time and focus its resources on Arabic-language data, localized applications and enterprise services. It also provides Chinese AI companies with another path into overseas markets. However, Humain still controls the local platform and customer relationships, while cloud service providers and chipmakers can also generate revenue from deployment demand. How much value MiniMax can capture will depend on licensing, joint development and ongoing service arrangements.

Nvidia’s revenue rose 106% year-on-year to $96.2 billion in its latest quarter, including $89 billion in data center revenue. But major customers, including Microsoft, Amazon, Google and Meta, are all developing their own AI chips. Acquiring Hugging Face would give Nvidia earlier access to demand for model development and deployment, while allowing it to reinforce its hardware advantage through software and inference services. Nvidia has pledged that Hugging Face will remain open and continue supporting different clouds and computing hardware, without requiring users to adopt Nvidia chips. Still, combining the two companies could bring more development activity into Nvidia’s software and computing ecosystem.

Turning influence into revenue

Chinese companies have begun trying to generate revenue from application programming interfaces, private deployments for enterprises, model fine-tuning, AI agent tools and cloud computing. Alibaba has a relatively complete commercial ecosystem, with Qwen expanding its developer base and Alibaba Cloud providing the computing power and enterprise services needed to run the models.

Alibaba’s revenue from AI-related products reached 12.4 billion yuan ($1.85 billion) in the quarter through June, marking its 12th consecutive quarter of triple-digit growth. While the company didn’t disclose how much of that revenue came directly from Qwen, the complete value chain formed by its models, cloud computing and enterprise services provides a clearer path to monetization.

The challenge is greater for independent model developers such as MiniMax, Z.AI and Moonshot AI. Open weights can help them rapidly grow usage, derivative models and brand influence, but training, inference and overseas services remain costly. If developers download their models and deploy them on other cloud platforms, these companies may gain little beyond name recognition, while chipmakers, cloud platforms and systems integrators capture the revenue. Overseas licensing, joint development and enterprise deployment projects therefore provide a better test of their business models than download figures alone.

Nvidia’s acquisition of Hugging Face shows that value in the AI industry is being redistributed among models, platforms, computing infrastructure and enterprise services. Chinese models have already established an advantage in downloads and developer adoption, while humain-m3 shows that they are beginning to enter large overseas projects.

The next test is whether model developers can retain control of customer relationships and revenue as platforms, computing providers and cloud giants compete to capture value. Download figures can demonstrate influence, but only sustained spending by enterprise customers can translate such influence into a durable business.

Lee Shih Ta is an editor at Bamboo Works.

You can contact him at shihtalee@thebambooworks.com

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