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July 11, 2019 06:21 pm PDT

China's AI industry is tanking

In Q2 2018, Chinese investors sank $2.87b into AI startups; in Q2 2019, it was $140.7m.

It's part of a massive slowdown in China's AI industry, which kicked off with massive political/economic fanfare from the Chinese state, which promised that the sector would be worth $150b by 2030, a boast that touched off anxiety about a global AI arms race.

Two years later, valuations for the companies that bet biggest on AI are plummeting. Baidu has sunk to a valuation of 10% of the worth of rivals Alibaba and Tencent, though they were all level as recently as 2017); the company's top AI scientists have quit, and the company booked its first losses since 2005.

Many of the early promising AI demos have fizzled or turned out to be smoke-and-mirrors: a much-vaunted demonstrations of health-tech companies like Ping An to diagnose diseases early and head them off before they could spread represent mere incremental improvements over techniques that were documented and demonstrated in the 1970s.

The other problem is that China simply can't produce the semiconductors that it needs for AI research; as a nation, China now spends $300b/year importing microchips (largely from South Korea) -- more than it spends on imported oil.

McKinsey, noting Chinas modest progress in the field, points to the exponential growth in money and effort required as chips advance: it takes about 500 steps to create a 20nm chip, but 1,500 steps for a smaller 7nm chip.

Meantime, the wealth of fab projects has triggered a scramble for talent and exposed a talent shortfall of more than 400,000 employees.

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Original Link: http://feeds.boingboing.net/~r/boingboing/iBag/~3/I0S5apOkRCQ/2-87b-to-140-7m.html

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