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Artificial intelligence given priority development status

One analyst now projecting industry in China to grow by more than 50 per cent in value to US$5.5 billion by 2018

PUBLISHED : Thursday, 09 March, 2017, 5:36pm
UPDATED : Thursday, 09 March, 2017, 10:59pm

China has pledged to prioritise the development of artificial intelligence for the first time within the government’s latest annual work report, underlining its ambition to lead what has fast become one of the hottest areas of global technological innovation.

One analyst is now projecting the industry in China to grow by more than 50 per cent in value to 38 billion yuan (US$5.5 billion) by 2018.

“We will implement a comprehensive plan to boost strategic emerging industries,” said Premier Li Keqiang in his delivery at the annual parliamentary session in Beijing over the weekend.

“We will accelerate research & development (R&D) on, and the commercialisation of new materials, artificial intelligence (AI), integrated circuits, bio-pharmacy, 5G mobile communications, and other technologies.”

Artificial intelligence, which focusses on creating machines that work and react like humans, will create the next industrial revolution and China and “should grab the opportunity to overtake other global competitors” in the field, added Zhou Hanmin, a member of the Standing Committee of the Chinese People’s Political Consultative Conference, the nation’s top political advisory body, during the “two sessions”.

Larry Cao, director of content for the CFA Institute, in response to Premier Li’s remarks on artificial intelligence, warned R&D and commercialisation “are high risk and often long term in nature” but that government backing will go a long way to paving the way for the industry to develop fast.

“If the government provides strong funding support, it will give China an edge in this competitive field,” said Cao.

If the government provides strong funding support, it will give China an edge in this competitive field
Larry Cao, director of content for the CFA Institute

This increased state support for AI will fuel an industry that could grow to 38 billion yuan in market size by 2018 from 24 billion yuan last year, according to the estimate by Beijing’s CCID Consulting Company in a recent research report – that would represent a massive 60 per cent growth in just two years.

The National Development and Reform Commission, China’s top economic planner, has already given the green light to the creation of 19 national engineering labs this year, three of which are dedicated to AI research and application, including deep learning, brain-like intelligence, virtual reality (VR) and augmented reality (AR) technologies.

“The tech world is shifting from a ‘mobile’ to an ‘artificial intelligence’ era, driven by deep learning, big data, and graphics processing units (GPUs), all of which accelerate the ability to compute,” said Rex Wu, an equity analyst for Jefferies.

“The migration will benefit cloud computing, GPUs, field programmable gate arrays (FPGAs) – which essentially power AI systems – and sensors, allowing increased AI data collection and preprocessing,” he added.

Cloud computing enables companies to buy, sell, lease or distribute online a range of software and other digital resources as an on-demand service, just like electricity from a power grid.

These resources are managed inside data centres. “Cloud” refers to the internet as depicted in computer network diagrams.

The tech industry has also already started embedding cognitive (conscious mental activities such as human thinking, understanding, learning) AI into a variety of products.

Cognitive AI enables machines to identify, comprehend and act in applications ranging from autonomous driving to financial services, such as so-called “Robo-advisors” – online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners.

Other leading areas are disease diagnosis and robots able to carry out surgical procedures.

Wu has seen several investment trends forming this year in the AI sector, following last year’s rapid growth in semiconductors and GPUs.

FPGAs, adopted by tech giants including Intel, Microsoft and Baidu to accelerate deep learning, have become alternatives to GPUs, Wu said.

AI functions offered as a part of cloud computing services to business customers and end-users, he added, are likely to further accelerate the migration to public clouds.

Leading the development of big data and deep learning have also become the primary competitive arenas for large organisations in their quest for AI dominance, while virtual assistants such as Apple’s Siri, will become what Wu calls the “killer apps” of the next-generation of smartphones.

Jefferies tips several tech industry players to lead this “new tide of artificial intelligence”, says Wu, including optical manufacturer Sunny Optical Technology and semiconductor foundry company SMIC, both of which he expects to enjoy “fast revenue and earnings growth” this year and next.

Among software developers, its top picks are video surveillance supplier Hikvision, and voice recognition software developer iFlytek.

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