China's Zhipu AI revenue quintuples in first half, loss narrows

By Liam Mo and Eduardo ‌Baptista

BEIJING, Aug 31 (Reuters) - ​China's Zhipu ​AI reported first-half revenue of 953.9 million yuan ($141.96 million), up 400% from a year earlier, as the Beijing-based startup sought to turn demand ‌for its AI models into sales while rolling out lower-cost products and ⁠expanding use of domestic chips.

The first large language model developer to list in Hong Kong posted a ‌net loss of 2 billion yuan ‌for the six months ended June 30, compared with a loss of 2.4 billion yuan a year earlier, while reporting a 36.6% rise in research and development ​spending to 2.1 billion yuan.

The company faces intensifying competition in China's AI sector, with rivals, including Alibaba, ByteDance and startups, such as Moonshot, cutting prices and racing ⁠to launch new models.

Rival MiniMax, which listed in Hong Kong in January, reported last week a 283% jump in ​first-half revenue to $116.6 million while its adjusted net loss more than doubled.

Revenues of Zhipu and MiniMax remain a fraction of those reported by ​U.S. labs, underscoring the challenge Chinese startups face ‌in monetising AI even as their open-source models gain global adoption.

Anthropic's annual revenue run rate topped $65 billion by the end of July, ⁠while OpenAI exceeded $25 billion in annualized revenue earlier this year.

Zhipu has sought to differentiate itself through coding and cybersecurity-focused models. It said its flagship GLM-5.3 matched Anthropic's Mythos 5 on some white-box ⁠code-review and vulnerability-discovery tests, though it lagged on more complex vulnerability-exploitation tasks.

In June, Zhipu's market capitalisation briefly ​topped HK$1 trillion, a first for a Chinese AI model firm, after the release of its GLM-5.2 model, though the stock has since shed nearly half of its value.

This month, Zhipu released lower-cost ‌GLM-5.3-Flash, which it said was tested entirely with the use of Chinese-made chips, as it accelerated a pivot away from imports ‌amid tighter U.S. export controls on advanced chips.

Analysts expect full-year revenue to reach 5 billion yuan ⁠in 2026 and the firm to ‌post an adjusted profit by ​2028, according to a J.P. Morgan research note.

($1 = 6.7197 Chinese yuan renminbi)

(Reporting by Liam Mo and Eduardo Baptista; Editing by Kirsten Donovan and ‌Tomasz Janowski)

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