Chinese Tech Giants Bet Big on AI Startup Zhipu in Heated Race With the US

Chinese Tech Giants Bet Big on AI Startup Zhipu in Heated Race With the US
Image Credit: Zhipu AI

China's leading technology companies are placing high-stakes bets on local AI startups, hoping to gain an edge in the intensifying AI race with the United States. The latest beneficiary is Beijing-based Zhipu AI, which raised $342 million this year from prominent backers including e-commerce titan Alibaba, social media powerhouse Tencent, food delivery leader Meituan, and financial technology giant Ant Group.

Zhipu is developing generative AI products including its ChatGLM chatbot and Qingyan assistant to compete with the likes of OpenAI's ChatGPT. The substantial funding from Chinese tech stalwarts reflects their eagerness to cultivate domestic alternatives at a time when advanced US AI firms are increasingly out of reach. Just this week, the US imposed tighter restrictions on supplying AI chips to Chinese companies.

The support of national tech champions has fueled Zhipu's meteoric rise. Its valuation skyrocketed from $500 million in July to over $1 billion by September after Alibaba, Tencent and others invested in the startup's Series B3 round. The new capital will further Zhipu's progress on its foundational large language model that powers products like ChatGLM.

Zhipu AI was founded in 2019, evolving from the research work of the Knowledge Engineering Group at Beijing’s esteemed Tsinghua University. Under the leadership of CEO Zhang Peng, a Tsinghua computer science PhD holder, Zhipu AI has firmly positioned itself as a prominent figure in the AI realm. Beijing remains the thriving hub of such technological innovations, housing a significant chunk of China's core AI establishments and domestically developed LLMs.

Zhipu says the funds will primarily be used towards refining its family of large language models. The company announced in June that it intends to open source its ChatGLM2-6B LLM. Their flagship chatbot, ChatGLM, also earned the distinction of being among the first generative AI services to receive the Chinese government's green light for public deployment in August.

Zhipu exemplifies China's thriving AI startup scene, concentrated in tech hub Beijing. Half of China's large language models hail from Beijing, alongside over one-third of the country's leading AI firms. This critical mass of talent and technology has attracted enormous venture funding despite US efforts to curb China's AI ascent.

Zhipu is not the only Chinese startup riding this wave. Just this week, rival firm Baichuan announced a massive $300 million Series A1 round from many of the same backers, including Alibaba, Tencent and Xiaomi. The funding valued the 6-month-old startup at over $1 billion, highlighting the sky-high valuations Chinese investors are willing to place on promising AI startups.

But success is not guaranteed. Formidable competitors like Alibaba and Baidu also possess the resources and brainpower to push the envelope in generative AI. Furthermore, as Zhipu, Baichuan and their peers rely more on homegrown solutions, they may lack access to cutting-edge American processors that currently power top AI models.

Nonetheless, by rallying behind startups like Zhipu, Chinese tech giants signal their intent to compete full-throttle with Silicon Valley in AI's next frontiers. The technology's potentially transformative applications, from intelligent assistants to creative tools, make it imperative for China to advance its domestic capabilities despite geopolitical headwinds. For both nations, leadership in artificial intelligence is considered a key strategic and economic priority in the decades ahead.

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