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A Saudi Arabian fund has backed China's best-known generative artificial intelligence startup, making it the one foreign investor within the country's efforts to construct a homegrown competitor to OpenAI.
Prosperity7, a part of the enterprise capital arm of state-owned oil company Aramco, has participated in an investment round of about $400 million for AI start-up Zhipu AI, two people accustomed to the matter said. The deal is price about $3 billion for the Chinese group.
China's fledgling generative AI sector has previously relied on domestic funding as a result of US restrictions, making Prosperity7's investment the primary high-profile example of a foreign backer backing one in every of the highest 4 generative AI startups.
Zhipu and its closest competitors – Moonshot AI, MiniMax and 01.ai – relied on support from government funding and huge, local cloud providers.
Prosperity7, which manages a $3 billion fund, was a minority investor in Zhipu's round, in accordance with two people. Prosperity7 and Zhipu didn’t reply to a request for comment.
The investment shows that Saudi Arabia is willing to support an ecosystem that might protect against US dominance within the AI ​​field. “The Saudis don't want Silicon Valley to dominate this industry,” said an individual near the fund.
Washington last 12 months announced a ban on some U.S. investments in China's artificial intelligence sector and tightened export controls on high-end chips used to coach and run AI models.
Leading global technology investors corresponding to SoftBank and Tiger Global backed the previous generation of Chinese AI groups that pioneered surveillance technology, most notably SenseTime, but remained low-key in the course of the generative AI offensive.
“Saudi Arabia’s importance to the Chinese tech ecosystem has grown a lot due to the lack of US money here,” said a tech consultant in Beijing.
For Chinese AI startups, support from foreign investors offers the chance to open up recent markets for his or her technology outside their home country, where firms traditionally don’t pay well for enterprise services.
The latest investment is an element of a broader collaboration between Saudi state investors and Chinese technology groups in the hunt for recent capital and recent customers.
On Wednesday, Chinese PC maker Lenovo announced it had issued $2 billion in convertible bonds to Alat, a subsidiary of Saudi sovereign wealth fund Public Investment Fund. In return, the corporate will arrange its regional headquarters in Riyadh and construct a producing plant in the dominion. This is the most recent example of Saudi investors imposing strict conditions on their technology investments. SenseTime, Tencent Cloud and Meituan are also expanding within the country.
At the identical time, the US is increasing pressure on other countries to stop supporting the Chinese technology sector through investments or the export of cutting-edge technology.
Abu Dhabi-based AI and investment firm G42 sold its stakes in Chinese technology firms, including ByteDance, under pressure from the US, the FT reported in February. After banning Chinese hardware from its systems, G42 received a $1.5 billion investment from Microsoft.
Meanwhile, the Saudis are usually not proof against Washington's influence. Amit Midha, Alat's chief executive, told Bloomberg this month he would pull out of China if forced to, as the dominion seeks to construct a domestic semiconductor industry.
“The US is our primary partner and the primary marketplace for the AI, chip and semiconductor industries,” he said within the interview.
Zhipu is China's largest generative AI startup by variety of employees, with greater than 800 employees working at its headquarters in Beijing's Haidian district. It previously raised money from Alibaba Cloud, Tencent and Meituan and is backed by state investors including the National Social Security Fund.
The company's most important business is selling an “AI-in-a-box” product to firms that wish to use the corporate's large language model with AI processors and other hardware on their very own premises, thereby ensuring higher data protection.
In May, Zhipu founder Tang Jie, a former computer science professor at Tsinghua University, appeared at a Prosperity7 investment forum in Beijing. The forum featured a sword dance performance by humanoid robots wearing the long-sleeved traditional Arabian garments generally known as thawbs.
Prosperity7 has investment teams in Saudi Arabia, China and the US. Its team in China has grown to a few dozen previously 4 years, in accordance with its website and LinkedIn. In contrast, other global funds have closed or scaled back their activities there.
