Zhipu AI raises 500 million yuan amid rising competition

Chinese startup Zhipu AI has secured 500 million yuan (£54.8 million) in funding from the state-owned Huafa Group, following a separate 1 billion yuan capital raise earlier this month.

Huafa Group, a government-backed conglomerate based in Zhuhai, Guangdong province, announced its investment as Chinese cities compete to support AI firms, a sector seen as critical in Beijing’s technological rivalry with the US.

The funding comes amid increasing competition in China’s AI industry, particularly with Hangzhou-backed DeepSeek, whose large language models have gained attention for their cost-effectiveness and performance against Western alternatives.

Zhipu AI, established in 2019 and recognised as one of China’s ‘AI tigers,’ has received investments from major tech firms including Tencent, Meituan, and Xiaomi. The startup was valued at 20 billion yuan (£2.2 billion) in a funding round last July, according to business registration platform Qichacha.

With the new funding, Zhipu AI aims to enhance technological innovation and further develop its GLM foundation model.

However, the company faces challenges on the international stage, having been added to the US Commerce Department’s export control list in January, restricting its access to American components.

Despite these hurdles, China continues to bolster its AI sector as it seeks to establish a leading position in global artificial intelligence development.

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