AI (Artificial Intelligence)
Beijing is backing a nationwide effort by the likes of Zhipu and Baidu Inc. to develop a domestic answer to ChatGPT. Image Credit: REUTERS

Saudi Arabia's Prosperity7 Ventures, LLC joined the latest financing round for up-and-coming startup Zhipu AI, becoming the first known foreign firm to back a major Chinese player in generative artificial intelligence.

The fund, an arm of Saudi Aramco, joined a recent investment that valued the Beijing-based startup at about $3 billion, according to people familiar with the matter, asking not to be identified because the deal hasn't been publicized.

Beijing is backing a nationwide effort by the likes of Zhipu and Baidu Inc. to develop a domestic answer to ChatGPT, a strategic imperative given AI's importance to future economies. The investment coincides with heightened US scrutiny over the activity of Middle Eastern wealth funds, part of a growing resistance toward entities regarded as having close ties with China.

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Zhipu AI declined to comment on the deal, which was first reported by the Financial Times. Aramco representatives had no immediate comment when contacted during a non-workday.

While tensions escalated with the US and Europe, Beijing has sought to strengthen ties with Saudi Arabia. In November, China and Saudi Arabia signed a local-currency swap agreement worth around $7 billion. Saudi Aramco, which controls Prosperity7, has invested billions of dollars in China's energy sector even as the kingdom tries to attract Chinese tech companies.

Founded in 2019, Zhipu AI is one of the earliest and better-known startups developing generative artificial intelligence in China, hoping to match the likes of Microsoft Corp.-backed OpenAI and Google. The company was among the first batch of Chinese firms to win government approval for a public rollout.

The startup, which has released a chatbot and a visual language foundation model, has also secured backing from Alibaba Group Holding Ltd. and Tencent Holdings Ltd. Other Chinese AI startups that've raised significant amounts from investors include Moonshot AI and MiniMax.