Opinions vary on which firms will survive, with some believing that only two to three general-purpose LLMs will dominate the market. Large tech companies like Alibaba, Tencent, and Baidu are seen as having an advantage due to their large user bases and wide range of services. However, many investors regret investing in LLM firms at the peak of the hype earlier this year, as many of these startups are now struggling to build strong business cases and are looking to partner with tech giants or potentially be sold to them.
Key takeaways:
- China's surge in generative artificial intelligence has led to numerous product announcements from startups and tech giants, but investors warn of a potential shakeout due to cost and profit pressures.
- China currently has at least 130 large language models (LLMs), accounting for 40% of the global total, just behind the United States' 50% share.
- Tensions between Beijing and Washington have impacted the sector, with U.S. dollar funds investing less in early-stage projects and difficulties obtaining AI chips.
- Investors believe that only a few general-purpose LLMs will dominate the market, and that China's largest tech companies Alibaba, Tencent and Baidu have the biggest advantage due to their large user bases and wide range of services.