Chinese technology companies are increasingly investing in the artificial intelligence (AI) sector as the U.S. enacts export controls. In the first half of 2024, Baidu's investment in AI totaled CNY4.2 billion, with Alibaba's and Tencent's AI investments each reaching CNY23 billion. This means that the capital expenditure on AI of Baidu, Alibaba and Tencent (BAT) exceeded CNY50 billion, more than doubling year-on-year, according to corporate financial results. The investments in AI have focused on buying chips and related infrastructure to enhance the training of large language models (LLMs), including self-launched models, the BAT companies said. The rise of AI is also driving the research and development (R&D) expenditures of financial and industrial companies. For example, Chinese financial services provider Hithink RoyalFlush Information Network Co increased investment in AI large models and LLMs in the first half of the year, meaning that its R&D investment accounted for 42.61% of total operating revenue, according to the company's financial results.
The U.S. has moved to cut off China's access to advanced AI chips and AI technologies, pushing Chinese tech companies toward self-reliance, which is part of the reason for the increasing R&D expenditure on AI, a Shenzhen-based industry observer surnamed Yang told the Global Times. “Companies focused their investment in the field of AI large models, while hiring more professional talent and investing in the construction of computing resources,” Yang said. As AI technologies gradually mature, AI enterprises now mainly focus on the intelligent upgrading of their products and services, with AI terminal applications starting to make profits and promoting the development of the physical economy and the efficiency of various industries, Yang noted. For instance, Alibaba's revenue from AI-related products grew at a triple-digit pace year-on-year in the quarter that ended on June 30. The number of paying users of Bailian – Alibaba Cloud's AI platform – more than doubled over the previous quarter. “'AI+' can empower thousands of industries and is also an important engine to promote new growth momentum in various industries,” said Yang.
While the U.S. is hoping that its suppression has a major impact on Chinese tech companies, especially AI-related firms, these malicious attempts are unlikely to delay Chinese companies' technological progress, Yang stressed. Some chip companies are reportedly developing new AI chips that will be exempt from U.S. export controls for the China market as they are not willing to lose the huge market, analysts pointed out, the Global Times reports.
The South China Morning Post adds that Chinese smartphone maker Realme aims to ship 100 million AI handsets in the next three years as the firm gears up to “popularize AI” for young consumers as global competition intensifies. Realme is breaking into the hotly contested field by sharpening its focus on imaging, efficiency and personalization, which revolve around the core needs of young users, CEO Sky Li said in a recent interview. “2024 marks the starting point for AI smartphones, and AI is an opportunity for the smartphone industry to reshape the future and push for disruptive innovation,” Li said. “For us, AI is an opportunity we absolutely cannot miss, and it’s also a new battlefield full of challenges.” Shenzhen-based Realme – a spin-off of Oppo – made a concerted push into AI with the recent launch of its flagship GT 6 device and the establishment of the Realme Next AI Lab. China is expected to lead the world in the adoption of AI-powered handsets, with the segment making up 12% of total smartphone shipments in China this year, ahead of the global average adoption rate of 9%, according to an April report by consultancy Canalys.
