Government-backed lab says China-chip compatibility will support secure, local AI use as it explores overseas expansion

A Hong Kong government-backed artificial intelligence lab is preparing to launch a new model built on DeepSeek that can run entirely on Chinese-made chips.

The Hong Kong Generative AI Research and Development Centre (HKGAI) plans to unveil its HKGAI-V3 model in the first half of this year as it looks to export its "sovereign AI" capabilities to overseas markets. 

The system was based on DeepSeek V4 architecture with "full-parameter fine tuning for localisation", and had been optimised to operate on both mainstream and domestic hardware, including Huawei Technologies' Ascend 910C chips, according to director Guo Yike, who spoke on the sidelines of a Tsinghua University alumni event in Hong Kong on Sunday.

HKGAI, established in 2023 under the government's InnoHK programme, focuses on developing large language models tailored to Hong Kong's needs. It launched the city's first Cantonese-enabled chatbot, HKChat, in November, offering services such as real-time bus information and guidance on local laws and regulations.

In a research paper published in July, HKGAI described its first model, HKGAI-V1, as a "crucial and pioneering step" towards building sovereign AI – broadly defined as the ability for a jurisdiction to develop and operate AI systems on its own infrastructure.

HKGAI said its V1 model outperformed general-purpose systems like DeepSeek on Hong Kong-specific queries, while enabling greater control over AI deployment in sectors such as public services, legal systems and education.

The upcoming V3 model's ability to run on Chinese chips would support private deployments, allowing governments and enterprises to operate AI systems on their own servers rather than relying on public cloud platforms, Guo said.

He added that HKGAI's experience in localising DeepSeek for Hong Kong could be extended to other markets by adapting the model to different cultural, legal and social contexts.

Hong Kong served as a great testing ground for developing sovereign AI because of its "complete legal system", its "highly dynamic social environment", and its role as a bridge between East and West, said Guo, who graduated from Tsinghua University with a bachelor's degree in computer science in 1985.

He is now also the provost at the Hong Kong University of Science and Technology.

"If this approach works in Hong Kong, it should also be applicable to other regions, such as [Southeast Asia]," he said.

HKGAI is already working with mainland companies and the government of Guangxi – China's key trading gateway to Southeast Asia – to promote its model in the region, although Guo did not disclose details.

He acknowledged that efforts to promote Chinese-developed AI overseas could face international rivalry.

"Competition is inevitable, so we will see who succeeds," he said. "Our Hong Kong experience is important in building a full-stack solution, from foundational models to computing power."

HKChat had attracted more than 700,000 registered users and tens of thousands of daily active users, according to Guo. After completing its incubation under the InnoHK programme in September, the lab plans to commercialise the technology by charging government and enterprise clients.

The centre was also considering bringing in equity investors and could – as the AI sector continued to expand – pursue an initial public offering within five years, Guo said.

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