Applications from Chinese AI companies. [AFP]
Applications from Chinese AI companies. [AFP]

Chinese AI companies are mounting an aggressive push to raise capital through share offerings and loans as they seek to close the gap with their American rivals.

China's leading AI models — including DeepSeek, which burst onto the scene last year, and Kimi K3, which has drawn attention recently for its strong performance — are now considered close to matching the technical capabilities of America's most advanced models. Yet China remains constrained in the competition by a shortage of investment capital and semiconductors, the Wall Street Journal reported Tuesday.

Against that backdrop, at least six Chinese AI model development startups are preparing initial public offerings on either the Hong Kong or Shanghai stock exchanges by next year.

Gary Tan, a portfolio manager at Allspring Global Investments, said the key driver behind the recent fundraising push is that "enormous capital is needed for AI model development, computing infrastructure and talent acquisition."

Some analysts also see the aggressive fundraising as a hedge against potential additional US restrictions.

The United States currently allows Chinese AI companies to use Nvidia's advanced semiconductors in data centers outside China. Anticipating that even this access could be curtailed, Chinese firms are moving quickly to secure funds and lock in contracts with overseas cloud service providers to reserve computing capacity ahead of any new curbs.

Investment opportunities in Chinese startups with the potential to lead the AI era are drawing attention from investors outside China as well. Moonshot AI, which released the massive open-weight model Kimi K3 last week, is closing a private funding round that values the company at more than $30 billion.

Moonshot AI is also preparing a Hong Kong IPO targeting early next year, people familiar with the matter told the Wall Street Journal. Earlier reports from foreign media had indicated the company was pursuing a listing within six months.

DeepSeek, Moonshot AI's rival, raised more than 50 billion yuan ($7.4 billion) in its first funding round this year and is now pursuing a second round. DeepSeek is also working toward a debut on the Shanghai stock exchange next year.

Z.ai, whose share price surged after its Hong Kong listing in January, launched a $4 billion share offering earlier this month.

Bond issuances have also emerged as a fundraising avenue. ByteDance, the parent company of TikTok, is in talks to borrow $20 billion from global investors through a bond offering. Tencent recently raised about $4.7 billion through bonds to fund its AI development.

Baidu, China's leading search engine, is pursuing a separate listing of its AI semiconductor unit this year.

Even so, the combined fundraising of China's top AI firms falls far short of what a single US leader has secured, the Wall Street Journal noted. OpenAI, the maker of ChatGPT, has this year secured commitments of more than $100 billion — the largest investment in Silicon Valley history.

Amid this, the Chinese government has called on state-owned and private investors to deploy "patient capital" — long-term investment that does not seek short-term returns — into technologies such as AI and semiconductors that require sustained funding.

Speaking at a national science and technology awards ceremony in Beijing earlier this month, President Xi Jinping said the country must "smooth the financing channels for enterprises and guide capital investment toward startups, small businesses, long-term projects and cutting-edge core technology sectors."

Following Xi's remarks, Chinese state-owned financial institutions said they would hold stakes in listed AI companies over the long term.

Charu Chanana, chief investment strategist at Saxo Markets, said AI supply chain companies raised more than $10 billion in Hong Kong in the first half of this year alone. More than 70 companies are currently waiting to list on the Hong Kong exchange.


yckim6452@heraldcorp.com