With 5G in the bag is China now leading on AI?

via Flickr © Tagosaku (CC BY-SA 2.0)

via Flickr © Tagosaku (CC BY-SA 2.0)

  • 5G the race has probably already been won, by China
  • But now it’s AI in the frame
  • And here Chinese startups have overtaken their US peers on venture capital investments

Trump’s trade war with China is not about steel imports - that’s just a political side-show to impress working class voters in states like Pennsylvania. It’s China’s determination to come out triumphant in key technological areas through its China 2025 programme and thereby threaten the US grip on the global tech industry, that really sticks in his craw. That’s what Trump appears to want to halt, or at least impede.

It’s too late to do too much about 5G. The big prize now is Artificial Intelligence and machine learning and China is getting ready to do well there too.

Wanna rematch when we get to 6G?

The reality is that  Huawei, ZTE and the Chinese CSPs have already pushed China into a commanding 5G lead. According to Deloitte, China is massively outspending the US on 5G (and potential 5G) infrastructure, with more than ten times as many sites primed to support 5G  than in the US.

During just three months in 2017, says Deloitte, China’s CSPs and cellular tower companies added more sites than the US had over the past three years.

And this is no last minute sprint on China’s part. Since 2015 it’s outspent the US by $24 billion, building 350,000 towers against the US total of 30,000 over the same period.

Deloitte reckons that, all things considered,  it may also be around 35 per cent cheaper to install 5G kit in China than it is in the US.

That part of the high tech battle has already been lost from the US ‘Race to 5G’ perspective, though the US could certainly set China back a year or two if it was to cut off the Intel/Qualcomm chip supply. However, such a move would badly hurt Intel and Qualcomm and would ensure that China would not only double down on its 2025 objective but would feel no qualms about plundering appropriate US intellectual property to get there.

But the big prize in IT now, most reports seem to agree, is  AI. And there things look pretty good for China too.

Big AI startup activity

According to ABI Research, Chinese AI startups beat their US counterparts and raised US$5 billion in venture capital funding in 2017. ABI says this shows that investors are confident with the technologies developed by Chinese startups, their business strategies, and market potential.

The overall global investment in AI startups increased over the year by a staggering 150% in 2017, growing from US$4 billion in 2016 to US$10.7 billion in 2017. US startups raised US$4.4 billion of investment from 155 investments, Chinese startups raised US$4.9 billion from just 19 investments. Chinese government activity is deemed to play a key role in attracting investment in AI startups.

“The bullish sentiment shared among Chinese investors is a clear sign that China is going all-in in artificial intelligence (AI). The government of China is setting clear policy guidelines for the future development of AI and startups are responding with cutting edge AI technologies across many industries,” said Lian Jye Su, a Principal Analyst at ABI Research.

By contrast, Europe seems to have long-term strategic objectives as far as AI investments are concerned. Startups in the region have diversified interests across different industries and verticals, mainly for use cases such as cybersecurity, digital ID, public safety, healthcare, and IoT.

The United States, on the other hand, takes a more balanced approach between short-term investments that could translate into immediate commercial opportunities and long-term transformative technologies targeting key sectors such as automotive, agriculture, finance, cloud robotics platform and insurance.

Chinese startups

Among all the Chinese startups, ABI marks Bytedance as attracting the highest funding. It’s the creator of Toutiao, a personalized news aggregator app, and Douyin, a personalized video clip app. It has raised over US$3 billion in investment and is enormously popular among Chinese youth, due to its content personalization and curation algorithms.

Another sector that received a lot of attention in 2017 was facial recognition. SenseTime and Face++ managed to raise significant funding due to the adoption of facial recognition technologies by various public agencies, payment and e-commerce companies.

“Chinese startups are not merely focusing on software development only as is the case in many other industry sectors but are also deeply involved with AI chipset innovation,” claims ABI. “Cambricon Technologies and Horizon Robotics have raised US$100 million in Series A funding respectively to design and manufacture purpose-built AI chipset for machine vision. The aim to launch a ‘Made in China’ chipset is one of the key priorities of the Chinese government. “Previous attempts have been futile, but the technologies developed by Cambricon Technologies and Horizon Robotics seem to be promising. Cambricon’s chipset IP has been integrated into Huawei’s premium smartphones, while Horizon Robotics focuses heavily on machine vision in the automotive industry. Such a multi-prong AI investment approach in both hardware and software will ensure that the Chinese AI ecosystem continues to flourish, innovate, and stay ahead of the competition.

“While 2017 was a roaring success for Chinese startups, the real fruits and impact will be felt in 2018 and beyond. Already we are seeing a few startups launching new products, venturing into new business, or being acquired in 2018,” says Su. Unisound, for instance, released one of the first Made in China AI chipsets for natural language processing in 2018; Xilinx, a U.S.-based field programmable gate array (FPGA) vendor, acquired DeePhi Tech, a Beijing-based startup focusing on deep learning optimization.”

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