New competitor to DeepSeek R1

Baidu and DeepSeek logos. Photo: Bloomberg .

Baidu has just launched two artificial intelligence models Ernie X1 and Ernie 4.5. In which, the Ernie X1 reasoning model competes directly with DeepSeek R1 on many factors at a lower cost.

Ernie X1 is a reasoning model that supports a wide range of applications such as advanced search, image generation, and web page reading. Based on benchmarks, Ernie X1's performance is on par with DeepSeek's open-source R1 model, but at half the cost.

"Ernie X1 has stronger understanding, planning, thinking and development capabilities," Baidu said. Some of the advertised tasks that X1 excels at include everyday conversation, complex calculations and logical reasoning.

According to WSJ , DeepSeek R1 shocked the tech world at the beginning of the year. The Chinese startup said that this model excels at problem-solving tasks, with performance on par with OpenAI's GPT-4o but at a lower cost per use, without requiring the most advanced chips for training.

Baidu also upgraded its Ernie platform model to version 4.5. Based on benchmarks, Ernie 4.5 surpasses GPT-4.5 in text generation, at a cost of only 1% of OpenAI's model.

The company said Ernie 4.5 and Ernie X1 will be integrated into consumer products, including Baidu Search and chatbots. Baidu will release the entire service package (including the X1 model) for free to users of the Ernie AI chatbot a few weeks earlier than planned.

Baidu plans to open source the entire Ernie AI model on June 30, marking a major shift in its strategy following the rise of DeepSeek. The R1 model is also being integrated into Baidu’s core search engine.

Starting out as a search service, Baidu was the first Chinese company to launch a ChatGPT-like product, called Ernie Bot, in 2023.

Baidu’s cloud division saw revenue rise 26% year-over-year in its fourth-quarter 2024 results, but the growth was overshadowed by weak advertising sales in China.

In February, Baidu completed a $2.1 billion deal to acquire streaming platform YY Live, a deal that saw the company set aside $1.6 billion in escrow accounts that it plans to invest in AI and cloud infrastructure.

Ernie Bot's interface when it launches in 2023. Photo: Reuters .

Along with other AI companies in China, Baidu is under increasing competitive pressure in the AI ​​field.

According to Bloomberg , chatbots from ByteDance and Moonshot AI have quickly gained popularity. Open-source models like Alibaba's Qwen and DeepSeek have been widely adopted by the global developer community.

Citi Research analysts described DeepSeek R1 as a “breakthrough debut” in the AI ​​field. Baidu has accelerated its development schedule as it watches its rivals continuously upgrade and launch new AI models.

“Baidu can maintain its competitiveness despite growing pressure between models, in the context of increasingly low barriers to market entry,” analysts said.