A battle of sorts is taking place in the field of artificial intelligence (AI). It has been widely reported that China is ramping up its focus on the technology that is expected to transform businesses and industries. Numbers from ABI Research point to a swing in favour of China.
China AI startups raised US$5 billion in venture capital funding in 2017 and overtook their US counterparts, a sign that investors are confident with the technologies developed by China startups, their business strategies, and market potential.
The overall investment values for AI startups increased year-on-year by 150 percent to US$10.7 billion in 2017.
Contrary to their US counterparts who raised US$4.4 billion of investment from 155 investments, Chinese startups raised US$4.9 billion from merely 19 investments, indicating a sharp focus by the investors on mature AI applications with strong commercial viability and successful use cases.
In addition, the influence of the China government plays 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 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, Principal Analyst of ABI Research.
In 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.
On the other hand, the US is taking 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.
Among all the China startups, Bytedance walks away with the highest funding. The creator of Toutiao, a personalised news aggregation app, and Douyin, a personalised video clip app, has raised over US$3 billion in investment and is enormously popular among Chinese youth, due to its content personalisation and curation algorithms.
Another sector that received a lot of attention 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.
China startups are not merely focusing on software development only as it is the case in many other industry sectors but are also deeply involved with AI chipset innovation.
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 China 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,” said 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 vendor, acquired DeePhi Tech, a Beijing-based startup focusing on deep learning optimisation.