China's Tech Giants Fuel the AI Race with a $340M Investment in OpenAI Rival

0:00Zipu AI has just secured 340 million dollars. um obviously right now we have you know this is happening amidst a really big u.s tech kind of china divide um so i think amid this whole escalating ai race between the u.s and china as a hipu ai is an emerging foundational model which developed um in china but it has announced of course that they have a significant fundraise of 2.5 billion yuan that's roughly 300 uh 340 million dollars. This development, I think, really kind of illustrates a larger narrative of two separate landscapes, one dominated by U.S. giants like OpenAI Ananthropic and other, you know, essentially China, which is having kind of some emerging AI powerhouses.

0:46Now, the reason I think all of this is important, if you've listened to my recent podcast on Chinese regulation, they've recently announced, essentially, they have said that if you don't want to get blacklisted and you want to be able to train AI in China, you cannot put anything into the training data that number one, China is actively censoring with their, you know, great Chinese firewall or whatever. So anything that the state is censoring, the CCP is censoring, Chinese Communist Party is censoring, you cannot include that in your data set. And in addition, any content that they think is like problematic to society that does not support the what they what they literally quote as the socialist agenda.

1:28Anything that does if you have more than like 5 % of your content that goes against their like ideological they have a bunch of ideological things so more than 5 % of your content is not in alignment with China's stated ideological um you know infer essentially ideological uh lines constitutions then your AI is going to get banned and in addition if you just train anything that is against anything that they're currently censoring you'll also get banned so i think that's important because we know that everything coming out of china all of these ai models coming out of china obviously are going to be heavily censored to the chinese communist party's agenda so it's interesting um because as obviously they're raising a ton of money 340 million dollars in this case um but with all of this you know i think it's important that we are aware and having conversation about conversations about what happens when this AI leaves China, comes to America, is incorporated into tools that we use here, what the implications of that are.

2:27So this was established back in 2019. And essentially, Apu's AI's origins can be traced back to the eminent Tishua University. So the company was initiated, it was kind of by Tang Ji, who's a distinguished professor at the university's Department of Computer Science and Technology. and the funding news arrives obviously during a very sensitive period where there's a lot going on between the US and China. I think the Biden administration recently really tightened exports and you know they have some regulations on NVIDIA's AI chips to China which is a move that I think is going to challenge China's ability to develop large language models.

3:05In response to potential semiconductor bans from Washington, China's AI firms have been amassing huge quantities of these chips with investments totaling hundreds of millions of dollars to maintain its stake in this you know high stakes ai competition uh zipu has ensured a robust financial backing by a lot of different investors um this 340 million dollar fundraise i think is particularly noteworthy since it originated from yon uh yuan dominated funds right so this is not american dollars that are getting sent over here this is you know money from inside of china that's developing this and i think this really right now demonstrates a market departure from the past 20 years where, you know, USD was a primary financing currency.

3:53However, recent geopolitical tensions, of course, driving this really big technological rift, I think have changed the investment landscape, specifically when we're talking about AI. I think notably Joe Biden in August issued an executive order prohibiting u.s investments in crucial chinese tech sectors and this kind of encompasses fields like ai semiconductors quantum computing all of that and so i think while the move is a strategy to counteract chinese military expansion right that was that's kind of like the idea behind this um essentially the executive order is like hey we're gonna like slow down their ai development so we can stay ahead their ai semiconductor quantum computing development so we can stay ahead because inevitably they're going to integrate this into their military and we don't want them to have that military edge.

4:38So that's kind of the US's thinking on that. I think it also kind of cast a shadow over China's China-focused American venture capitalists. So as a result, we saw a bunch of different companies, right? We saw Sequoia Capital China and GGV Capital. They both underwent some rebranding or structural changes to kind of adapt to the shifting environment. I think this led a bunch of different venture capital firms, including Hongshan, which was formerly capital china um sunway capital and hill house capital uh they all participated in zoop's funding round and uh there was zipu's funding round and additionally i think a state fund managed by legend capital also backed the ai firm surprise surprise the chinese communist party's state fund is invested in this so in case you're wondering is this ai going to be super aligned with the Chinese Communist Party?

5:34I think the answer is probably yes. So, and of course, I think that's why like Sequoia Capital had to rebrand and, you know, kind of distance themselves from their Chinese branch because, you know, probably investing alongside the CCP in technology that's inevitably integrated into the, you know, the People's Republic of China's army or whatever probably isn't a good look for an American venture capital firm. So I think adding another feather to its cap. Zipu also got support from a big list of Chinese internet giants who typically operate as competitors. So we saw Alibaba, Tencent, Ant Group, Xiaomi, and Kingcroft.

6:13They all co-invested in this round, which I think is kind of highlighting the potential they see in this, or maybe they're just being blackmailed by the Chinese Communist Party. Who knows, right? In any case, I think on the technology front, Zipu recently made headlines by open sourcing its bilingual conversational AI model, chat GLM 6B. This model trained on 6 billion parameters and it has, you know, running inferences on standard consumer grade graphics cards. So additionally, Zipu has also released an open source foundational model, the GLM 130B, which was trained on around 130 billion parameters.

6:52Overall, this is a very interesting landscape as China's getting more into this. I think it's gonna be interesting to see how they roll some of this technology out into America or into products that they ship to America and whether we want this you know Chinese censored AI or not I feel like it's going to find its way here so this is going to be an interesting area to keep an eye on and to talk about.