Baidu Launches $145M AI Fund to Boost Chinese Start-ups

In the race for dominance in artificial intelligence (AI), Baidu, often referred to as China’s Google, is taking a significant step by setting up a venture-capital fund to support Chinese AI start-ups. With this move, Baidu aims to establish its technology as the foundation of China’s AI ecosystem. The company faces competition from local rivals Alibaba and Tencent, and by creating its own generative AI product called ERNIE Bot, Baidu has made a strong entry into the AI tools market.

The development of AI in China is influenced by government restrictions, which can both hinder the progress of generative AI tools and strengthen Baidu’s position as a platform for safe product development. Additionally, Baidu possesses a valuable advantage with its in-house Kunlun semiconductors. These semiconductors could prove crucial to the growth of the domestic AI industry, especially as the United States tightens restrictions on advanced chip exports to China.

Baidu’s latest move further signifies China’s push for AI self-reliance amidst the U.S.-China decoupling. The ongoing decoupling has led to a divided tech landscape between the two major economies, shaping the development of generative AI—a red-hot area that transforms text into various forms of content like prose, images, and videos.

China’s pursuit of independence from U.S. technological foundations has prompted the country to develop its own large language models (LLMs) that rival OpenAI’s GPT models. Notably, some of the most advanced AI initiatives in China are taking place within established internet giants like Baidu. The company launched its counterpart to ChatGPT earlier this year, demonstrating its commitment to AI advancement.

During a recent JPMorgan summit, Baidu’s co-founder and CEO, Robin Li, announced the launch of a billion yuan ($145 million) fund to support generative AI companies. This fund can be compared to OpenAI’s Startup Fund, which initially started at $100 million and eventually grew to $175 million. Baidu’s fund aims to invest up to 10 million yuan (approximately $1.4 million) in each project, targeting early-stage AI applications. Currently, Chinese generative AI startups have not experienced widespread adoption, and most investments are concentrated in the seed and early stages.

Baidu’s intention extends beyond solely supporting other AI startups. The company plans to utilize the fund to foster the adoption of its own large language model, Ernie Bot. While American developers are building applications based on ChatGPT and other language models, Li believes that an increasing number of Chinese developers will build AI applications using Ernie as their foundation.

The fund’s focus on application-oriented AI aligns with Baidu’s belief that Chinese companies will once again take the lead in discovering commercial applications for AI in the generative AI age. Chinese startups have gained recognition for their ingenuity in devising novel business models, ranging from livestreaming to live commerce and short videos. Li’s optimism stems from China’s ability to embrace new technologies and harness them to create popular and useful applications, as demonstrated by the successes of WeChat, Douyin, and Didi.

However, a critical question arises regarding the robustness of China’s homegrown large language models to handle the range of real-life scenarios expected of them. China aims to develop its own LLMs to reduce vulnerability to U.S. sanctions that could cut off key technological supplies, similar to what has occurred in the semiconductor industry. Baidu, Alibaba, Tencent, and other Chinese tech giants are all investing in the development of their own large language models.

In conclusion, Baidu’s establishment of an AI fund and China’s pursuit of technological self-reliance indicate the country’s determination to excel in the field of artificial intelligence. Baidu’s initiatives and investments in generative AI, coupled with the support for domestic AI start-ups, position the company at the forefront of China’s AI ecosystem. As China continues to foster AI innovation and application development, the future of AI in the country looks promising. The quest for AI dominance and self-sufficiency is a global race, and Baidu’s strategic moves highlight China’s ambition to become a major player in this transformative field.

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