<div id="readability-page-1" class="page">Chinese artificial intelligence start-up StepFun has unveiled a lightweight AI model that it says punches above its weight, rivalling larger systems from domestic competitors including DeepSeek and Moonshot AI as competition intensifies in the country’s AI sector. The Shanghai-based AI lab said on Monday its latest Step 3.5 Flash model was designed to deliver advanced reasoning and agentic capabilities while maintaining efficiency. Despite its relatively modest size of about 196 billion parameters – far smaller than Moonshot AI’s Kimi K2.5 with 1 trillion parameters or DeepSeek V3.2 with 671 billion parameters – Step 3.5 Flash outperformed its larger rivals across several benchmark tests measuring agentic, reasoning and coding capabilities, according to the company’s self-reported results. Parameters are the variables that encode an AI system’s “intelligence”, with a larger number usually indicating stronger performance. Step 3.5 Flash topped four reasoning benchmarks, including AIME 2025 and IMOAnswerBench, outperforming leading systems from DeepSeek, Moonshot AI, Zhipu AI and MiniMax, and trailing only Microsoft-backed OpenAI in certain tests.  The model’s compact size and focus on reasoning were deliberate choices, according to Zhu Yibo, StepFun’s co-founder and chief technology officer. Zhu said the team had prioritised “strong logic capability, efficient context window and fast speed” when developing the new system, which was purpose-built for the AI agent era. StepFun had favoured smaller models after learning from past experience with larger systems that took longer to train and delayed delivery, Zhu said. “Step 3.5 Flash’s strength focuses on where we care the most: its agent capability underpinned by strong logic reasoning,” Zhu wrote in a post on Chinese question-and-answer platform Zhihu on Monday. A few Chinese chip developers, including Huawei, Biren Technology, Enflame Technology and MetaX Technology, have adapted their chips to run the StepFun system. The release comes as Chinese AI developers rush to launch new models around the Lunar New Year to capitalise on the festive season. Alibaba Group Holding and Moonshot AI, a start-up it backs, have just introduced their latest offerings. Beijing-based Zhipu and Shanghai-headquartered MiniMax are expected to launch new iterations of their systems, GLM-5 and M2.2, respectively, with all-around improvements. Alibaba owns the South China Morning Post. StepFun raised 5 billion yuan (US$720 million) last month from its latest financing round to support development. Investors in the B plus round included state-backed vehicles such as Shanghai SSCI Leading Private Equity Fund, Pudong Venture Capital and Xiamen ITG Holding Group. Chinese Big Tech Tencent Holdings and venture capital funds 5Y Capital and Qiming Venture Partners also took part.</div>

AIYY

MDAI

VSAI

<p>Chinese AI start-up StepFun has launched its Step 3.5 Flash model, a compact AI system with 196 billion parameters, outperforming larger competitors like DeepSeek and Moonshot AI in reasoning and coding benchmarks. The model emphasizes efficiency and strong logic capabilities, designed for the AI agent era. StepFun's approach favors smaller models for quicker training and delivery. The release coincides with a surge in new AI models from various Chinese developers ahead of the Lunar New Year. StepFun recently raised 5 billion yuan (US$720 million) to support its development, attracting investments from state-backed and private entities.</p>

- Chinese start-up StepFun has introduced its AI model, Step 3.5 Flash, claiming it rivals larger competitors such as DeepSeek and Moonshot AI despite having only 196 billion parameters.  
- The model has reportedly outperformed these larger rivals in several reasoning and coding benchmarks, with its design focusing on efficiency and strong logic capabilities.  
- As competition in the AI sector intensifies, StepFun's recent funding of 5 billion yuan aims to bolster further development amidst the launch of new models by other Chinese tech firms ahead of the Lunar New Year.

Compact AI model from China’s StepFun outshines rivals from DeepSeek, Moonshot