Since the end of last year, Open AI has released Chat GPT, which has attracted attention and follow-up around the world. In the domestic market, large technology companies such as Baidu and Alibaba have also opened large models. On May 6, iFLYTEK released the Spark cognitive model and officially entered the operation. At that time, some people asked, how long will it take for the domestic large model to catch up with Chat GPT? At the event site that day, Liu Qingfeng, chairman of iFLYTEK, gave a timetable: on October 24, the iFLYTEK Spark large model will surpass Chat GPT in Chinese, and English is equivalent to it.
October 24 is the time node for iFLYTEK to fulfill its promise. At the 2023 iFLYTEK Global 1024 Developer Festival held on the same day, Liu Qingfeng officially released the Xinghuo cognitive model V3.0. Regarding the catch-up problem that everyone is concerned about, Liu Qingfeng said that the Chinese ability of the Xinghuo cognitive large model exceeds that of Chat GPT3.5, and the English ability is comparable. However, he also admitted that there is still a gap between domestic large models and GPT4.
On the day of the event, Liu Qingfeng released another small goal: in the first half of 2024, the Xinghuo cognitive model 4.0 will be fully benchmarked against Chat GPT 4. However, iFLYTEK's share price fell 9.97% on the day. Behind the situation of "ice and fire" in the capital market and industrial development, how should we view iFLYTEK's Spark cognitive model?
3 major upgrades in half a year
Since its release on May 6, in less than half a year, the iFLYTEK Xinghuo cognitive model has completed three major upgrades: on June 9, it broke through the open-ended Q&A, significantly improved the ability of multiple rounds of dialogue, and upgraded the mathematical ability; On August 15, the code capability was upgraded and the multi-modal interaction capability was improved. On October 24, the general model was benchmarked against Chat GPT, and it was an industry leader in education, medical and other fields.
This is the answer sheet handed over by iFLYTEK in the "100 model war". On October 24, at the 6th World Sound Expo and the 2023 iFLYTEK Global 1024 Developer Festival, Liu Qingfeng announced the official release of the Xinghuo cognitive model V3.0. According to the evaluation report of the Economic Research Institute of the National Research Center, the comprehensive ability of the Spark model V3.0 surpasses that of Chat GPT, leading in China and reaching the international first-class level, and its performance in the medical, legal and education industries is particularly outstanding.
According to Liu Qingfeng, in seven dimensions, such as text generation, language understanding, knowledge question and answer, logical reasoning, mathematical ability, code ability, and multimodal ability, the Xinghuo cognitive model V3.0 has been improved, and it is fully benchmarked against Chat GPT. With its excellent ability improvement, the Spark model has accumulated 12 million users since it was opened for download on September 5.
The improvement of a number of capabilities has continuously promoted the application of the Spark large model and empowered thousands of industries. At this press conference, iFLYTEK also launched three large models, including Antelope Industry, Scientific and Technological Literature, and iFLYTEK Xinghuo Medical, as well as 12 industry models including finance, property, and law jointly released with industry leaders.
For domestic large models such as iFLYTEK, in addition to catching up with Chat GPT, the supply of computing power is also a problem that cannot be ignored. At present, iFLYTEK and Huawei are jointly building the "Feixing-1" platform, an independent and controllable large-scale model computing power base based on the Ascend ecosystem. According to Liu Qingfeng's spoilers, "Feixing-1" doubled the training and inference efficiency of the Xinghuo large model within half a year. iFLYTEK will launch large-scale model training with larger parameters on this platform, and is expected to benchmark GPT 4 in the first half of 2024.
The reduction of major shareholders caused dissatisfaction
For domestic large-scale model contestants such as iFLYTEK, in addition to constantly upgrading their own products, they are also facing the opportunities of the times. In April this year, Goldman Sachs released a report predicting that the cognitive model will bring 7% growth to global GDP in the next 10 years, about $7 trillion. Gartner has just released the world's top 10 strategic technology trends, seven of which are related to artificial intelligence. The agency expects more than 80% of businesses to use generative AI by 2026.
Although the ideal is very full, there are also many practical difficulties for iFLYTEK.
First, net profit fell sharply. For investors, most of them like to buy listed companies with stable profitability. The third quarterly report just released by iFLYTEK is undoubtedly difficult to satisfy those investors who value profitability.
According to the data, in the third quarter of this year, iFLYTEK achieved revenue of 4.772 billion yuan, a year-on-year increase of 2.89%; The net profit was 257.9 billion yuan, down 81.86% year-on-year. In the first three quarters, iFLYTEK achieved revenue of 12.614 billion yuan, a year-on-year decrease of 0.37%; The net profit was 99.3621 million yuan, a year-on-year decrease of 76.36%.
Regarding the decline in net profit, iFLYTEK said in the third quarterly report that the company actively seized the historical new opportunities of general artificial intelligence and firmly invested in large models. According to the data, the closing balance of iFLYTEK's development expenditure increased by 44.08% compared with the opening balance, mainly due to the increase in R&D investment in the current period. For iFLYTEK, it is necessary to continue to invest money to continue to upgrade the Xinghuo cognitive model and train more industry models.
Second, the frequent reduction of holdings by major shareholders has caused dissatisfaction among investors. On August 15, iFLYTEK announced that Chairman Liu Qingfeng recently reduced his holdings of 39.956 million shares through the block trading system, and the shareholding ratio dropped to 5.54%. It is reported that Liu Qingfeng's reduction is to repay the financing money he participated in the private placement in 2021.
However, the time for the chairman to reduce his holdings coincided with the high share price of iFLYTEK. This inevitably leads to investor discontent. Before the chairman completed the shareholding reduction, iFLYTEK also disclosed the announcement that the major shareholder China Mobile planned to reduce its shareholdings. It is reported that China Mobile plans to reduce its holdings by no more than 23,156,700 shares from August 22 to December 31. As for the reason for the reduction, China Mobile said that it was to recover investment costs and achieve good shareholder returns.
Third, there is a long way to go for the commercialization of large models. In less than half a year, iFLYTEK has completed three major upgrades of the large model, which undoubtedly highlights the company's technical strength. Especially after the release of the Spark model, the number of users has reached 12 million, and the number of developer teams has exceeded 170,000.
At present, the Xinghuo model still lacks commercial monetization capabilities. According to reports, the current C-side experience of large models is still free. The specific commercialization will wait for the scene to be deepened. When will large models be truly profitable? Liu Qingfeng said that it is necessary to wait for the large model to truly meet more rigid needs, whether it is medical care, education or other services.
In his opinion, the entire commercial benefits brought by the large model to iFLYTEK next year will be very obvious, including new revenue and gross profit. However, iFLYTEK will still invest all the new revenue in the research and development of large models. From 2024 to 2025, the large model may enter a state of very benign income and expenditure.
For iFLYTEK, the battle of large models is so important. Whether it can install a new engine for performance growth depends on the commercial monetization ability of the Xinghuo cognitive model. At present, the capital market is still in a wait-and-see mode.