China overtakes the US in funding for AI startups
Artificial Intelligence (AI) is the biggest new thing in the world of tech today. The possibilities and potential offered by machines able to think faster and perform millions of calculations simultaneously are too immense to ignore. According to a report by business analytics and research platform MarketsandMarkets, the global AI market will be worth about $190 billion by 2025. Naturally, everybody – from the largest tech giant to the smallest tech startup – wants a share of the pie. Over the years, given the predominance of tech hubs like Silicon Valley, the United States has been the leading source of funding and resources for startups looking to join the burgeoning AI sector. But that may be changing.
A recent report by data analysis and research firm CB Insights has revealed that China has overtaken the US in terms of funding available for AI startups. According to the report, 48 percent of the world’s total AI startup funding is concentrated in China, as against 38 percent in the US. While these numbers are open to interpretation against larger contexts, it marks a significant uptick in Chinese interest in the AI sector. The country’s government has been quick to repurpose resources for the use of its growing AI sector, as well as offering a relatively lax regulatory environment for local companies, allowing for greater experimentation and innovation.
This does not mean that China has taken the top spot from the US as far as AI is concerned overall. The country still accounts for only 9 percent of the total volume of individual deals in the AI sector, while the US has a higher number of AI startups and funding overall. However, the CB Insights report reveals that as far as the dollar value of AI funding is concerned, China is ahead, noting that the country is “aggressively executing a thoroughly-designed vision for AI.” Also, China’s massive 1.4-billion-strong population offers a great pool of resources for data, innovation, and market research, making it easier for companies to come up with and test new concepts and products faster.
The biggest recipient of funding in China’s AI sector appears to be facial recognition technology, with 41 deals worth $1.6 billion being confirmed in 2017 alone. The technology is increasingly commonplace in various cities in the country, used for a wide variety of purposes, including electronic monitoring and surveillance by government authorities. Another major sector receiving startup funding is AI chip manufacturing, where companies like new chip manufacturer Cambricon are able to raise large amounts of funding relatively easy (Cambricon raised $100 million in August).
On the other hand, leading mainstream tech companies and manufacturers like Intel, Qualcomm, and Nvidia are still pumping more R&D resources into the US instead of China. China’s AI startup sector may be booming and growing at a rapid pace, but the country’s hostility towards foreign companies means that in the global context, it is still uncertain what this growth means for the rest of the world. For the moment, the best tactic seems to be to wait and watch.