SHANGHAI/HONG KONG – Chinese start-up Moonshot AI has temporarily paused new subscriptions after demand for its newly launched Kimi K3 model strained capacity, a bottleneck that comes as the company seeks fresh funding and prepares for a potential Hong Kong listing.
Moonshot is in the process of unwinding its current offshore structure ahead of a Hong Kong initial public offering, two sources with knowledge of the matter said.
The company has engaged financial advisers, including Goldman Sachs and China International Capital Corp (CICC), to discuss the IPO plan, although the timetable remains fluid, said one of the sources and a third person with knowledge of the IPO plan, declining to be named as the information was confidential.
CICC did not immediately respond to a request for comment. Goldman Sachs and Moonshot declined to comment.
Founded in 2023 by Yang Zhilin, an AI researcher who pursued doctoral studies at Pittsburgh-based Carnegie Mellon University, Moonshot is one of China’s most closely watched AI start-ups.
It raised more than US$2 billion (S$2.58 billion) in May from investors including Meituan, China Mobile and CPE, according to a fund-raising teaser seen by Reuters, bringing the company’s total historical fund raising to more than US$5.5 billion.
It has since begun seeking up to US$2 billion in fresh capital, with its valuation reaching US$30 billion in June, the teaser showed.
Strong demand for increasingly powerful models is boosting investor interest in China’s leading AI start-ups, but it is also raising the need for costly computing infrastructure.
Moonshot’s competitors, including DeepSeek, have recently sought external capital to expand compute capacity as Chinese AI firms race to narrow the gap with US rivals.
Moonshot said on July 19 that since Kimi K3’s release, it has drawn 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.
Moonshot said it would pause new consumer subscriptions immediately and allocate available computing power to current paid users, who would be unaffected by the shortage.
The company also said 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.
Capacity crunch follows Kimi K3 release
The capacity crunch follows a strong reception for Kimi K3, which Moonshot unveiled on July 17 as a 2.8 trillion-parameter model, making it the world’s largest open-weight AI system, according to the company.
“Kimi K3 has received far more love than we expected, and our GPUs are feeling it,” Moonshot said on social media platform X, adding that new subscription spots would reopen in batches as capacity was added.
Kimi K3’s size and focus on coding and agent-style tasks make it more expensive to serve at scale, as such workflows typically require repeated model calls and heavy inference capacity.
While open-weight models allow users to download and customise the underlying system, analysts say few users are likely to host a model of Kimi K3’s scale themselves because of the hardware costs involved.
Moonshot said Kimi K3 performed competitively with leading US models in some technical tasks, while independent evaluations have also pointed to strong performance.
The launch comes as other Chinese AI firms such as Z.ai and MiniMax release more capable models at lower cost, challenging assumptions that China’s model developers lag US peers by months.
Alibaba, an investor in Moonshot, said on July 19 that Qwen3.8-Max-Preview, its 2.4-trillion-parameter model, had debuted on its AI platforms ahead of a planned open-weight release.
US export controls on advanced Nvidia chips, however, have made access to computing power a key constraint for these ambitious companies. REUTERS
