StepFun nears record $2.5B pre-IPO round, expands AI smartphone integration

Chinese AI startup StepFun is on the verge of closing a roughly $2.5 billion pre-IPO financing round, setting a new single-round fundraising record for China's large language model sector. The company's strategy centers on 'native multimodal AI + AI terminals' — embedding AI models directly into smartphones rather than relying solely on cloud processing. StepFun has already secured partnerships with major handset makers OPPO, Honor, and ZTE, covering about 60% of China's leading smartphone brands. This terminal-focused approach is paying off: over 42 million devices now have StepFun's AI installed, generating nearly 20 million daily active users.

The terminal business has become StepFun's primary growth driver, outpacing its cloud-based AI offerings. The record $2.5B pre-IPO fundraising signals strong investor confidence in on-device AI, especially as Chinese regulators push for AI sovereignty and local tech champions. StepFun's approach contrasts with US firms like OpenAI and Google, which currently emphasize cloud-centric models. By tightly integrating with smartphone OEMs, StepFun aims to capture the massive Chinese mobile user base and potentially set a template for AI distribution in markets where privacy and offline capabilities are prioritized over cloud connectivity.