Saudi Arabia Funds China's AI Startup to Compete With OpenAI

By Thea Felicity

May 31, 2024 10:57 AM EDT

A Saudi Arabian flag flies at the Saudi Arabian consulate in Istanbul on October 5, 2018, as protestors take part in a demonstration demanding the release of journalist Jamal Khashoggi. - Jamal Khashoggi, a veteran Saudi journalist who has been critical towards the Saudi government has gone missing after visiting the kingdom's consulate in Istanbul on October 2, 2018, the Washington Post reported.
(Photo : OZAN KOSE/AFP via Getty Images)

A Saudi Arabian fund has become the sole foreign investor in China's generative artificial intelligence (AI) sector, therefore backing the country's efforts to challenge industry leader OpenAI, according to Yahoo Finance.

Prosperity7, the venture capital arm of Saudi state-owned oil giant Aramco, has participated in a $400 million investment round in Zhipu AI, a leading Chinese AI start-up. This investment values Zhipu AI at approximately $3 billion.

Zhipu AI, headquartered in Beijing's Haidian district, is the largest Chinese generative AI start-up by staff size, boasting over 800 employees. It has previously secured funding from Alibaba Cloud and support from state investors like the National Social Security Fund. 

China's generative AI company's primary product is an "AI-in-a-box" solution, offering companies on-premises AI processing for enhanced data security.

READ MORE: US-China Tech Rivalry Intensifies: Chinese Expert Predicts Rapid Catch-Up in Supercomputing

China's AI Sector

Historically, China's generative AI sector has relied heavily on domestic funding due to US restrictions on technology exports and investments.

However, Prosperity7's involvement marks the first high-profile foreign investment in one of China's top four generative AI start-ups. 

Alongside Zhipu AI, Moonshot AI, MiniMax, and have been primarily supported by Chinese government funds and major local cloud providers.

China's competitive efforts against OpenAI are believed to be due to Biden's tightened controls on AI technology exports to China and banned certain investments in the sector, as reported by VCPost.

Saudi Arabia remains susceptible to US influence, although experts recently stated that the company would divest from China if necessary.

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