Chinese AI industry shifts with emergence of local solutions threatening cloud dominance

(MENAFN) A notable shift is occurring within the Chinese artificial intelligence (AI) landscape as local AI groups have initiated the sale of "AI in a box" systems, all-in-one hardware setups designed for companies to deploy within their own premises. This emerging trend poses a significant challenge to the dominance of cloud computing services provided by major technology entities in China, including Alibaba, Baidu, and Tencent.

Huawei, a prominent player in the Chinese tech scene, has entered into contracts with over a dozen AI startups to collaborate on the development and marketing of large language models integrated with the company's AI processors and other hardware components. Partnering firms such as Zibo AI and iFlyTech, known for their expertise in linguistic models, are instrumental in advancing Huawei's offerings in the AI space.

These local Chinese groups are actively promoting on-premises or private cloud solutions, leveraging advances in generative AI to cater to the growing demand for data processing and analytics capabilities. This shift is forecasted to capture a significant portion of the country's cloud computing market, with Huawei projecting the market size for "all-in-one devices" to reach 16.8 billion yuan (USD2.3 billion) this year.

Analysts from Minsheng Securities anticipate further growth in the market for government-funded AI initiatives, forecasting a substantial increase to 450 billion yuan by 2027. Liu Qingfeng, founder of iFlyTech, emphasized the appeal of on-premises solutions during the launch event of its "AI in a box" product, highlighting attributes such as performance, security, controllability, and immediate usability. This trend diverges from the commercialization approach observed in the West and addresses Chinese companies' concerns regarding data protection and sovereignty.

The proliferation of "AI in a box" solutions has the potential to constrain the ambitions of tech giants that have heavily invested in cloud-based AI infrastructure. Companies like Baidu, led by Robin Li, have outlined expansive visions of deploying numerous AI applications leveraging foundational models via their cloud services. However, the increasing adoption of on-premises AI solutions threatens to fragment the Chinese cloud market further, potentially reshaping the competitive landscape and challenging the dominance of established players in the industry.  



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