Major Chinese tech firms double AI investment in H1

Chinese technology companies are increasingly investing in the artificial intelligence (AI) sector as the U.S. enacts export controls targeting China's AI sector.

In the first half of 2024, Baidu's investment in AI totaled 4.2 billion yuan ($589.2 million), with Alibaba's and Tencent's AI investments each reaching 23 billion yuan.

This means that the capital expenditure on AI of BAT (an acronym standing for Baidu, Alibaba and Tencent) exceeded 50 billion yuan, 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, BAT said in their financial results.

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 percent 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, thus having pushed 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 on Tuesday.

"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 promote 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, according to Alibaba's financial results.

"'AI+' can empower thousands of industries and is also an important engine to promote the expansion of 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.