Large Chinese firms have significantly ramped up their adoption of artificial intelligence (AI) this year, with a notable increase in contracts related to large language models (LLMs). According to government data, the number of tender contracts for services involving LLMs surged from 23 in the first quarter to 58 in the second quarter, as reported on the China Government Procurement and China Tendering and Bidding Public Service Platform websites. The term “damoxing,” the Chinese word for LLM, was used in these contracts.
LLMs are the technology behind conversational AI bots like OpenAI’s ChatGPT. Since the introduction of ChatGPT in late 2022, Chinese technology firms have launched hundreds of their own LLMs and products based on them. Only one LLM-related tender contract was signed in the first half of 2023, but this number increased significantly in the last quarter of the year. Public disclosures of these contracts are required only for projects involving public interest and safety, public funds, or loans from foreign entities.
Major Chinese tech companies such as Baidu, Huawei Technologies, and Tencent Holdings, as well as several well-funded start-ups, were among the successful bidders in the first half of the year. The data provides insight into the growing adoption of AI in China, highlighting the companies gaining traction and the industries utilizing these technologies.
Key sectors showing strong interest in LLMs include energy, telecoms, finance, and scientific research, with these industries securing 19, 14, 12, and 10 deals, respectively. For instance, a district environmental protection agency in Beijing purchased bespoke LLMs to help predict flood seasons. The Nuclear Power Institute of China and China Merchants Securities are using LLMs developed by Beijing-based start-up Zhipu AI to organize knowledge from years of operations for more convenient staff access.
Chinese energy companies are also leveraging LLMs to identify deficiencies in power grid equipment and oil exploration. Notably, Zhipu AI, one of China’s “AI Tigers,” has secured the most LLM-related contracts this year, with 12 successful bids. AI firm iFlyTek, known for its voice-recognition technology and sanctioned by the US, won 10 contracts, primarily from Chinese state-owned enterprises and government agencies. Baidu and Huawei followed with five and three successful bids, respectively.
The pace of LLM contract bidding picked up significantly in the second quarter, with successful bids increasing from nine in January, five in February, and nine in March to 20 in April, 24 in May, and 14 in June.
The total value of the 81 contracts awarded this year amounts to 433 million yuan, averaging 5.3 million yuan per contract. The most lucrative contract was awarded by PipeChina (China Oil & Gas Piping Network Corporation), which is paying 152.6 million yuan (US$21 million) to Taifu Industry, a subsidiary of Shandong Energy Group, for LLM-related technology. Taifu will develop both software and hardware for training and developing LLMs for PipeChina, although the specific applications of these LLMs were not detailed in the contract.
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