The United States is stepping up pressure on Chinese AI companies, with the Trump administration warning it could impose sanctions on firms like Moonshot AI over allegations of using American technology without permission. As reported by Nikkei Asia, Treasury Secretary Scott Bessent stated that Chinese companies that illegally copy American AI technology could face sanctions or be placed on the US Entity List, which would bar access to advanced American technologies including Nvidia's most powerful AI chips. The concerns emerged after Moonshot launched the Kimi K3 model, an open-weight AI model with 2.8 trillion parameters that has been widely noted for offering high performance at a lower price than competing systems. Michael Kratsios, director of the White House Office of Science and Technology Policy, alleged that Moonshot built an internal system capable of carrying out large-scale distillation of American AI models while making the activity difficult to detect, and obtained servers powered by Nvidia's latest GB300 chips with access to additional computing resources in Thailand for AI training.
According to Bloomberg, Moonshot AI has officially distributed the shareholder resolution to investors, seeking approval for a Hong Kong listing within six months. The Beijing-based startup behind the Kimi chatbot is now in the process of unwinding its current offshore structure ahead of the planned IPO, as reported by Business Standard. The company has engaged financial advisers including Goldman Sachs and China International Capital Corp to discuss the IPO plan, with the timetable remaining fluid. This represents a nearly sevenfold increase from the company's $4.3 billion valuation held in December, as reported by MLQ News. The company is expected to begin its final funding round before the listing in August at a reported valuation of about $50 billion, according to Nikkei Asia. However, as reported by Investing.com, the company has not yet published a formal prospectus or confirmed an offer price, with important details including audited financial performance, proposed ticker symbol, and final IPO timetable remaining unknown.
As reported by Fortune, Moonshot released the Kimi K3 model on July 16 at Shanghai's World Artificial Intelligence Conference, with the complete open-source launch set for July 27. The model features a one-million token context window and matches several leading US models on coding benchmarks. Independent assessment platforms Artificial Analysis and Arena.ai positioned Kimi K3 alongside premier American models, including OpenAI's GPT series and Anthropic's Claude family. Arena ranked K3 first for building web interfaces, ahead of rival frontier models from several leading American and Chinese labs. The launch triggered what traders called a fresh DeepSeek moment, with Taiwan's benchmark index falling more than 6% and Japanese equities dropping 4%. Hong Kong-listed rival Z.ai lost as much as 30% of its value in its steepest single-day decline since January, while Zhipu and MiniMax experienced share declines of approximately 27% and 16% respectively on Hong Kong's stock exchange.
According to Business Standard, Moonshot announced on Sunday that it has temporarily paused new subscriptions for Kimi K3 after the model's release drew massive user interest, leading to unprecedented compute challenges. Over the past 48 hours, user requests had sharply exceeded forecasts and were approaching the limits of existing clusters. The company said it would pause new consumer subscriptions immediately and allocate available computing power to current paid users, who would be unaffected by the shortage. Moonshot also announced it would split future memberships into two plans, including one just for coding, a move aimed at matching compute resources more precisely with user demand. The company said new subscription spots would reopen in batches as capacity was added, with Kimi K3's size and focus on coding making it more expensive to serve at scale as such workflows typically require repeated model calls and heavy inference capacity.
According to Bloomberg reports, Moonshot is simultaneously finalizing a funding round that could value the firm at more than $30 billion. The startup's annual recurring revenue reportedly doubled to about $200 million by April, up from roughly $100 million in early March. The company has experienced even more rapid growth, with its annual recurring revenue climbing to $300 million by June, representing a significant jump from the $200 million recorded in April—a span of merely two months. Revenue from Kimi K2.5 in its first 20 days on the market reportedly exceeded all of the company's 2025 revenue combined, demonstrating unprecedented commercial velocity. This accelerated growth has fueled investor appetite even as Beijing restricts Chinese AI firms from taking foreign capital without clearance. The company has raised more than $2 billion in May from investors including Meituan, China Mobile and CPE, bringing its total historical fundraising to over $5.5 billion.
The Moonshot AI IPO represents a broader shift in capital markets, with IPO offerings averaging about $1.75 billion in 2026, approximately four times what was seen in 2025, as reported by AMBCrypto. However, the US concerns come as Chinese AI companies rapidly expand their presence in the global market, with Chinese open-source and open-weight AI models accounting for at least 30% of enterprise usage every week since February on platforms like OpenRouter, according to Nikkei Asia. Large international companies including Uber and Airbnb have also acknowledged using some Chinese open-source AI models. The US government has signalled preparedness to take stronger action, including sanctions, export restrictions and limits on access to advanced AI chips, as Chinese AI models become more popular globally. The scrutiny extends beyond AI startups, with the US Department of Defense adding several major Chinese companies including Alibaba, BYD and Baidu to its list of firms believed to have links to China's military, arguing that many modern technologies can serve both civilian and military purposes.
