This year, AI startup Zhipu has seen a wave of capital flowing into its coffers, some of it from such influential tech firms as Alibaba Group Holding Ltd. and Tencent Holdings Ltd, both of which invested 2.5 billion yuan ($342 million) in the new company.

China’s two biggest tech firms joined with both rivals and peers, ranging from Ant Group Co. to Xiaomi Corp. in investing in Beijing Zhipu Huanzhang Technology Co., which is looking to build a Chinese rival to OpenAI’s ChatGPT. HongShan, the former Sequoia China, as well as food delivery company Meituan also joined in, according to a statement by the company.

Additionally, many of the same companies had also joined in supplying a $300 million round of financing for Baichuan, a rival to Zhipu.

Within China Zhipu and Baichuan are two of the more famous startups looking to compete with the likes of Microsoft-backed OpenAI and Google, by offering their own generative AI product. Venture capital companies and tech innovators have been investing billion into training and developing AI services, as they seek to get a foothold in the industry sweeping through Silicon Valley and Europe.

Baidu Inc. billionaire founder Robin Li announced on Tuesday that his company’s language model Ernie had reached parity with OpenAI’s GPT-4, which would make his firm the leader in its nation-wide race.

Based out of Beijing, Zhipu become one of the early leaders in China when it was granted government approval to go public in August. Since then it has released an open-source chatbot which it named Qingyan.

The interest that companies like Zhipu have generated demonstrates how the burgeoning competition between the US and China is far more significant than a simple rush into a new technology. AI is expected to transform a broad swath of industries from transport companies to media firms and finance companies, and perhaps supercharge a new era of economic growth.

The technology also has military applications which are complicating the already tense relationship between Washington and Beijing.

This month the United States increased the restrictions on allowing China access to advanced chips by companies such as Nvidia Corp. which can be used to train and run AI models. Chinese industry experts say domestic AI developers will have to turn to domestically produced products, however Washington has been adding AI chip design companies to its blacklist of restricted firms.

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