China's craze over generative artificial intelligence has triggered a flurry of product announcements from startups and tech giants on an almost daily basis, but investors are warning a shake out is imminent as cost and profit pressures grow.
"Only those with the strongest capabilities will survive," said Esme Pau, head of China internet and digital asset research at Macquarie Group, who expects consolidation and a price war as players compete for users.
She added that several leading companies have signaled they will compete on price to gain market share, just as"In the next six-12 months, LLMs with lower capacities will gradually be eliminated due to chip restrictions, high costs and intensifying competition," Pau said.Yuan Hongwei, chair of Shenzhen-based venture capital Z&Y Capital, said she believed that only two to three general-purpose LLMs will end up dominating the market.
Baichuan was started by Wang Xiaochuan, founder of China's No.2 internet search engine Sogou Inc, and became one of the first five companies to receive Beijing's approval to release a public chatbot in late August. The company is on track to close a second round that will value it at $1 billion, Wang said.
"We see an opportunity here," Yuan said. "Wang himself is leading this project. Given his understanding of the digital business, his success with Sogou and how he commands attention industry-wide, we think it is our best bet."
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