State-Owned Huafa Group Invests in Zhipu AI
Chinese artificial intelligence (AI) startup Zhipu AI has secured 500 million yuan ($69.04 million) in funding from state-owned Huafa Group, further strengthening its financial backing amid Beijing’s push for AI self-sufficiency. This follows a 1 billion yuan funding round announced earlier this month, backed by Hangzhou City Investment Group Industrial Fund.
Huafa Group, a Zhuhai-based state conglomerate, recently confirmed its investment in Zhipu AI, state media Zhuhai Special Economic Zone Daily reported on Thursday. The investment comes as Chinese cities compete to support AI startups, a sector that Beijing sees as critical in its ongoing technology rivalry with the United States.
Rising Competition Among Chinese AI Firms
Zhipu AI’s funding boost follows the rise of DeepSeek, a rival AI startup whose large language models (LLMs) have gained attention for competing with Western AI models at lower development costs. The Hangzhou government was among the key backers in DeepSeek’s 1 billion-yuan funding round, highlighting the intense race among Chinese cities to support homegrown AI firms.
Founded in 2019, Zhipu AI is recognized as one of China’s “AI tigers”, with previous investments from tech giants Tencent, Meituan, and Xiaomi. Business registration platform Qichacha estimated the company’s valuation at 20 billion yuan in its July 2024 funding round.
US Sanctions and Future Plans
Despite its rapid growth, Zhipu faces challenges following its blacklisting by the US Commerce Department in January 2024. This sanction bars the company from procuring US-made components, posing potential hurdles to its development.
According to Zhuhai Special Economic Zone Daily, the newly secured funds will be used to enhance technological innovation and further develop its GLM foundation model, a key component of its AI research.
With continued state support, Zhipu AI is poised to expand its presence in China’s AI ecosystem, despite growing geopolitical tensions.
With inputs from Reuters
