A recent report indicates that China’s artificial intelligence venture market is demonstrating notable resilience amid a broader slowdown in venture capital activity, according to a new Q2 2026 analyst note from PitchBook. While overall VC deployment has contracted significantly since its 2021 peak, AI-related investments continue to capture an expanding portion of available capital.
The research report from PitchBook underscores a clear evolution toward greater discipline, with funding increasingly channeled into fewer, larger, and more strategically aligned opportunities rather than widespread early-stage experimentation.
AI accounted for 20.5 percent of total VC deal value in China in 2024, rising from 11.7 percent the prior year, and held steady at 19.6 percent in 2025.
Absolute deal value, which reached a high of $23.3 billion in 2021, fell to $7.8 billion in 2023 before recovering modestly to roughly $10–11 billion annually in 2024 and 2025.
Deal volume followed a parallel path, declining from 1,408 transactions in 2021 to around 1,000 in 2025.
Median deal sizes have climbed steadily, reaching $7.4 million year-to-date in 2026, with particularly sharp increases in capital-intensive areas such as semiconductors (median $35 million in 2025) and hardware systems.
This concentration is most evident across the AI value chain.
Investment has shifted decisively toward enabling infrastructure and enterprise applications, prioritizing business and productivity software, compute hardware, and semiconductors over consumer-facing tools.
In software, AI deal value totaled $4.2 billion across more than 400 transactions in 2025, heavily weighted toward enterprise solutions that drive operational efficiency and integration into existing business systems.
Consumer and social platforms, once prominent, have largely faded from the funding landscape.
Hardware investment surged to $2.7 billion in 2025 from $0.9 billion the year before, dominated by computers, parts, and peripherals tied to AI servers, accelerators, and edge computing—leveraging China’s manufacturing strengths.
Semiconductors, though smaller in scale at $1.6 billion in 2025 (nearly double 2024 levels), represent the most policy-driven segment.
Activity centers on application-specific chips and AI accelerators critical for domestic model training and technological independence amid global supply constraints.
General-purpose chips and production segments receive far less attention within venture rounds. Investor participation has also transformed.
Traditional venture capital still leads by deal count, but corporate investors, corporate venture arms, and government-linked funds have grown substantially more influential, especially in hardware and semiconductors.
Government-backed entities participated in over 140 AI deals in 2025, up sharply from earlier years, reflecting alignment with national goals for self-sufficiency.
Nondomestic investors’ share of deal value has contracted markedly, falling from peaks near 10 percent to 7.1 percent in 2025, with deal count involvement consistently below 3 percent. Exit activity persists but remains constrained and localized.
Public listings generate the bulk of liquidity, with Hong Kong serving as the primary venue. Extended time-to-exit horizons reflect the greater scale and complexity of today’s AI companies.
The PitchBook analysis portrays a maturing Chinese AI ecosystem that is becoming more self-reliant and industrially focused.
Capital is consolidating around infrastructure and enterprise deployment rather than broad experimentation, positioning the sector for sustained but more targeted growth under tighter conditions. PitchBook has concluded in the research reprt that this disciplined approach may limit breadth in favor of depth in strategically vital areas.