ABI Research says the US has once more reclaimed the title of top dog when it comes to artificial intelligence (AI) venture capital investment.
ABI Research’s Artificial Intelligence Investment Monitor 2018 application analysis report says the United States commanded the most AI investment values in 2018 globally at 52.3%. Based on the investment figures in 2019, the gulf between the United States and China will continue to get wider, with the U.S. share expected to reach 70%.
Investments by the likes of Cruise Automation, Dataminr, Zoox, and Zymergen propelled this growth, which could further increase to US$14 billion in 2019.
“The United States is reaping the rewards from its diversified AI investment strategy. Top AI startups in the United States come from various sectors, including self-driving cars, industrial manufacturing, robotics process automation, data analytics, and cybersecurity. All these startups research on and invest in cutting edge deep learning technologies in their solutions, democratizing AI for enterprises and end consumers,” said Lian Jye Su, principal analyst at ABI Research.
China isn’t exactly doing nothing when it comes to AI investments. It still experienced a healthy year-on-year growth rate of 54%, with a total of US$7.4 billion. Since 2016, AI has been of special interest in China, particularly around machine vision, which has translated into the creation of hugely successful AI startups with large market reach and deep technology, including SenseTime, Yitu Technology, and CloudWalk.
China’s focus on certain strategic areas of AI technology starts to become a double-edged sword. Now that these Chinese startups have cornered the domestic market, they are facing challenges expanding into overseas markets due to different regulations and market conditions.
Another challenge lies in the slow adoption of AI in traditional enterprises in the domestic market. As compared to the United States and Europe, where labour cost and skill shortage are key concerns, China continues to enjoy the benefits of an affordable labour force, especially in industrial manufacturing. Major enterprises are still leaning on conventional workflow and not aggressively embarking on digital transformation. This means less risk-taking in AI startups that are less mature.
Into 2019, China will suffer from the ongoing trade war with the United States. The effort to curtail Chinese firm’s access to strategic U.S. technology seems to have achieved the short-term goal of halting AI advancement in China.
As the larger and less developed of the two giants, AI investment prospects for China remain positive. “Favourable policies and flexible regulations in China, backed by a government willing to invest and deploy innovative technologies at scale, will certainly amplify AI adoption in the region. While the United States may be leading in investment in AI research and development, in the longer term, China will be able to capitalize on those technologies and bring them to the masses,” concluded Su.