AI Arms Race: China’s $47 Billion Semiconductor Fund, Musk’s xAI Secures Funding
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AI Arms Race: China’s $47 Billion Semiconductor Fund, Musk’s xAI Secures Funding

China has raised an astonishing $48 billion for its national semiconductor fund, while Elon Musk's AI startup, xAI, secured $6 billion in a new funding round.
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China’s state-owned “Big Fund” spearheaded the effort to bolster the country’s chip-making capabilities amidst intensifying technology competition with the United States. The third phase of the fund doubled the amounts raised in previous years raising over $47 billion, with the Chinese Ministry of Finance being the largest investor.

This move shows China’s determination to achieve self-sufficiency in critical technologies like semiconductors as U.S. export controls exert pressure on its tech industry. The fund’s investments will target the semiconductor supply chain, focusing on manufacturing and advanced chip technologies.

xAI Raises $6 Billion with a Pre-Money Valuation of $18 Billion

Meanwhile, xAI, the AI venture backed by Elon Musk, attracted investments from prominent players such as Valor Equity Partners, Vy Capital, Andreessen Horowitz (a16z), Sequoia Capital, Fidelity, Prince Alwaleed Bin Talal, and Kingdom Holding. The $6 billion funding round, one of the largest in the AI sector, gives xAI a pre-money valuation of $18 billion.

The company, which emerged from Musk’s social network, X, aims to compete with established AI giants like OpenAI, Microsoft (NASDAQ: MSFT), and Google (NASDAQ: GOOG). The funds will bring xAI’s products to market, build advanced infrastructure, and accelerate research and development.

xAI has already made progress with its chatbot, Grok, which is available to Premium+ users on X, with plans to expand its user base in the future. Despite challenges in developing “truthful” AI systems, as evidenced by reports of Grok generating misleading information, xAI’s decision to open-source the Grok model demonstrates its commitment to transparency and collaboration within the AI community.

Do you think xAI can compete with OpenAI over the coming years? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.