Alibaba-backed Zhipu plans IPO as China’s AI startups race for market dominance

BEIJING, CHINA: Zhipu has enlisted China International Capital Corp. to spearhead an initial public offering (IPO) as soon as this year, angling to become the first of several prominent ChatGPT-competitors to tap public markets.

The six-year-old firm and CICC have begun to prepare for the debut and could formally apply to list by October, according to IPO documents filed with the country’s stock market watchdog.

Backed by Alibaba Group Holding Ltd and Tencent Holding Ltd., Zhipu is one of just a handful of Chinese startups trying to take on OpenAI globally. Since the emergence of DeepSeek, Zhipu and rivals from Moonshot to Minimax have rolled out low-cost AI services at a rapid clip, aiming to stake out a spot in the burgeoning arena and set standards for future advancements.

Zhipu in March closed a 1 billion-yuan ($137 million) financing round led by local government-backed firms, underscoring Beijing’s growing interest in AI following DeepSeek’s ascent. That investment came after Zhipu got added to another trade-restriction blacklist by the US Commerce Department in January, which threatened to impede access to critical technology. The Chinese company has denied alleged links to the Chinese military.

Zhipu’s IPO timing remains unclear. Many dealmakers are sitting tight while investors digest global trade and market volatility.

But many AI startups require capital to sustain a dizzying pace of investment and research. Chinese tech firms dare racing to build low-cost AI products after DeepSeek released a capable model supposedly trained at a fraction of the cost of American peers, including OpenAI.

AI agents, which in theory can perform tasks for users, are one of the hottest areas of exploration.

DeepSeek narrows China-US AI gap to three months

Beijing-based Zhipu has unveiled its own AutoGLM for deep research. The AI agent outperformed OpenAI’s GPT-4o and Anthropic’s Claude 3.5 Sonnet when accessed via a web browser, Zhipu CEO Zhang Peng said during a presentation at a time. On Tuesday, Zhipu released another open-source model under its GLM series that it says costs users a fraction of what DeepSeek’s R1 charges.

Not all players may ride out the intensifying competition. Chinese entrepreneurs Kai-Fu Lee expects just three AI models to survive an impending domestic shakeup.