US Blacklists Tencent-Backed AI Startup as Tech Curbs Deepen

(Bloomberg) -- Washington has added Tencent Holdings Ltd.-backed startup Zhipu to a trade-restrictions blacklist, taking aim at one of a handful of fledgling firms considered frontrunners in the race to develop an answer to OpenAI’s ChatGPT.

The US Department of Commerce on Wednesday named the startup to its entity list, which precludes US suppliers from selling to the company without a license, in another last-minute measure from the outgoing Biden administration. The move coincided with a fresh round of regulations aimed at keeping advanced chips such as AI accelerators from making their way to China.

Backed by Tencent and Alibaba Group Holding Ltd., Zhipu is one of a half dozen promising artificial intelligence developers in China that have secured funding at lofty valuations. The company, which grew out of Tsinghua University research and is working on large language models such as those from OpenAI, was last year valued at close to $3 billion.

Zhipu said the US “lacked factual basis” for the decision. “Being included in the Entity List will not have a substantial impact on the company’s business,” Zhipu wrote on WeChat on Wednesday.

Earlier export prohibitions on advanced AI chips from US makers like Nvidia Corp. to China already inhibit Zhipu’s access to the most advanced AI development hardware. The company, which raised about $410 million in its latest round in December, said it has tens of millions of users in China.

Zhipu is one of a plethora of Chinese firms targeted by various US government blacklists in recent weeks. A week earlier, Tencent was added to a Defense Department list of companies associated with the Chinese military, alongside Tesla Inc. battery maker Contemporary Amperex Technology Co. Ltd.

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