China Story Briefing: AI Agent Funding Meets Geopolitics, Price Wars Erupt | April 29, 2024

Benchmark backs Manus AI's global gamble, Baidu slashes AI prices, Honda partners CATL, Tesla hits rare earth snag & microdramas go global.

Hi everyone, welcome to this issue of the China Story Briefing! Your quick scan and decode of key happenings in China's tech landscape this week. Our goal is concise, relevant info with initial insights.

(Beyond the Briefing, we're also preparing more in-depth Deep Dives. Stay tuned! All content is currently free.)

News

• AI Agent Funding Meets Geopolitical Reality:

  • Bloomberg: Chinese AI Agent startup Manus (Butterfly Effect) scores $75M led by Benchmark, valuation nears $500M (~5x jump). Plans expansion to US, Japan, Middle East. [Bloomberg]

  • The Information then reports Manus is considering moving HQ overseas (possibly Singapore) due to geopolitical risks. [The Information]

  • Takeaway: Top VC bets on Chinese agent potential, but reality forces tough choices on the globalization path.

• China's LLMs Race Towards Application & Lower Prices:

  • Baidu Cloud upgrades Ernie platform & slashes Ernie model prices (some Turbo models ~25% of DeepSeek R1 cost) to accelerate enterprise adoption. [LatePost]

  • BMW to integrate DeepSeek AI into new China models, CEO notes "key AI progress is happening in China." [Reuters]

  • Takeaway: Price wars intensify; focus shifts to platform usability and real-world impact in key verticals like auto.

• Supply Chain Collaboration & Contention:

  • Honda partners with CATL to co-develop LFP batteries & integrated battery-body platform. [CLS]

  • Tesla's Optimus robot production impacted by China's rare earth export rules; Musk confirms talks for export license. [Reuters]

  • Takeaway: Critical tech partnerships endure, but state control over strategic resources increasingly shapes global supply chains.

• AI Content Generation Tools Iterate:

  • Tencent upgrades Hunyuan 3D model (v2.5) to 10B parameters, improving precision; API available. [Sina Finance]

  • ByteDance's Dreamina launches Seedream 3.0 text-to-image model, touting high quality. [LINK: Dreamina X]

  • Genspark AI Slides demos automated presentation generation. [LINK: Genspark Link]

  • Takeaway: Continuous evolution in AI for 3D, image gen; toolization and platformization trends are clear.

• Hardware & Chip Maneuvers:

  • Reports suggest SMIC's 5nm process development still faces yield challenges. [cnBeta]

  • ByteDance, Alibaba, Tencent reportedly stockpiled Nvidia H20 chips before new US curbs.

  • Takeaway: China's cutting-edge chip pursuit remains tough; high reliance on restricted but leading AI chips persists.

• Apple Reorgs Siri: Vision Pro leadership takes charge, signaling determination to fix AI shortcomings.

• New Content Export: Microdramas: China-originated microdrama apps like ReelShort find surprising success in the US with short, vertical, pay-per-episode romance content. [x]

  • Takeaway: Novel content formats & business models from China can find global traction.

Ideas

• The AI Agent "Going Global Paradox": Manus highlights a core tension: attracting top global VCs/markets might necessitate "de-Sinicization" (like potentially moving HQ) due to geopolitics. The globalization narrative for Chinese AI startups may increasingly involve such structural shifts. How can they balance innovation origins with global market access?

• AI Infrastructure Race Behind the Price War: Cloud vendors like Baidu slashing model prices isn't just about the models; it's a battle over the efficiency and cost-effectiveness of their underlying AI cloud infrastructure. Providing stable, cheap, easy-to-use infra for running AI models could be the real differentiator as enterprise adoption accelerates. Is the focus shifting from making models to running them efficiently at scale?

Data

• Manus: Raised 500M (post-money), valuation 75M

• Baidu Ernie Turbo: Some models priced ~25% of DeepSeek R1.

• Tencent Hunyuan 3D v2.5: 10 Billion parameters.

• ByteDance Seedream 3.0: Supports up to 2K resolution.

• Microdrama Apps: Multiple in US Top 100 Entertainment chart.

That's it for this China Story Briefing. Hope this helps you quickly grasp the key tech movements in China. We're also working on more in-depth Deep Dives, so stay tuned!