Zhipu AI, a leading Chinese artificial intelligence company and OpenAI rival, has suspended its public trading following a $558 million initial public offering, citing volatile market conditions and investor sentiment. The move underscores growing uncertainty in China’s tech sector.
- Zhipu AI raised $558 million in its IPO, down from an initial target of $800 million
- The company suspended trading after its shares fell over 30% on the first day
- Trading was halted due to weak subscription demand and market volatility
- Zhipu AI is a direct competitor to OpenAI, developing models like GLM-4
- The suspension affects early investors and employees with restricted shares
- The event reflects broader challenges in China’s tech capital markets
Zhipu AI, a prominent player in China's AI race, has halted its public market debut just days after raising $558 million in its initial public offering. The company, which positions itself as a direct competitor to OpenAI, had planned to list on the Hong Kong Stock Exchange, but trading was suspended due to sharp declines in its share price and weak subscription demand. The IPO, which priced at HK$24.50 per share, saw the stock fall more than 30% on its first day of trading, prompting the company to invoke a circuit breaker mechanism to pause trading. The $558 million fundraising total reflects a significant reduction from the initial target of $800 million, highlighting investor caution despite Zhipu’s strong technical capabilities and government-backed AI initiatives. The company, founded in 2023, has developed large language models such as GLM-4 and has partnered with major Chinese tech firms including Tencent and Baidu. However, its post-IPO performance has been hampered by broader macroeconomic pressures, including cooling domestic demand for AI infrastructure and heightened regulatory scrutiny of tech firms. Market participants note that the suspension is a rare move for a company of Zhipu’s stature, signaling deeper fragility in China’s capital markets despite government efforts to stimulate tech investment. The decision affects not only Zhipu’s shareholders but also early investors and employees holding restricted shares. Analysts suggest that the company may reevaluate its listing strategy, possibly pursuing a secondary listing in another jurisdiction or delaying its public debut indefinitely. The event underscores the challenges facing high-growth Chinese tech firms trying to access international capital. With global sentiment toward Chinese equities remaining cautious and geopolitical tensions affecting cross-border investment flows, Zhipu’s muted debut serves as a cautionary tale for other AI startups planning public offerings in the region.