SHANGHAI/BEIJING: A new artificial intelligence model from Chinese startup Moonshot has surprised the U.S. technology industry with capabilities that rival leading systems from OpenAI and Anthropic, highlighting China's rapid progress in open-source AI despite U.S. technology restrictions.

The company's latest model, Kimi K3, has drawn attention from developers and industry analysts, with some describing it as one of the year's most significant AI releases.

"This may be the single biggest release of the year," said Anastasios Angelopoulos, co-founder and CEO of AI evaluation platform Arena, adding that it marked a point where open-source Chinese models were surpassing closed U.S. models.

Arena ranked Kimi K3 at the top for what it calls "front-end coding capability," a benchmark measuring the performance of large language models. Angelopoulos said additional results were expected to reinforce the model's strong performance.

The launch came shortly before Chinese President Xi Jinping opened the country's annual World Artificial Intelligence Conference in Shanghai.

"The development of artificial intelligence should not be a solo performance by any single country but rather a symphony of global cooperation," Xi said.

Kimi K3 follows the release of Z.ai's flagship GLM-5.2 model last month, which has gained popularity among software developers who say it delivers performance close to leading U.S. models at a lower cost.

The excitement surrounding K3 has drawn comparisons with the launch of DeepSeek's AI model in early 2025, which shook global markets. However, not everyone believes the latest reaction is justified. Technology analyst Patrick Moorhead described the response as an "overreaction shockingly similar" to the DeepSeek launch, while saying it could pose revenue challenges for OpenAI and Anthropic.

At the Shanghai conference, Huawei also showcased its Atlas 950 SuperPoD AI computing system, underscoring China's efforts to build domestic AI hardware despite U.S. export controls on advanced chips. Moonshot has not disclosed the hardware used to develop K3, though the company is a Huawei partner.

According to Bank of America analysts, K3 is the most expensive Chinese AI model to use so far but still costs about half as much as OpenAI's GPT-5.6 Sol model.

The release also comes amid continuing tensions between U.S. and Chinese AI companies. OpenAI and Anthropic have accused several Chinese firms of using "distillation" to extract capabilities from their models, allegations Beijing has rejected as "groundless."

In February, Anthropic accused DeepSeek, Moonshot and MiniMax of attempting to "illicitly extract Claude's capabilities to improve their own models."

Moonshot co-founder and Chief Executive Yang Zhilin earned his doctorate at Carnegie Mellon University in 2019. His former adviser, Russ Salakhutdinov, welcomed the launch, writing: "What a huge win for the open-source community! It feels like just yesterday Zhilin was graduating from my lab at CMU."

The latest release is expected to intensify competition between Chinese and U.S. AI developers as both sides race to build increasingly capable models.