In mainland China, the excitement surrounding artificial intelligence isn’t driving a surge in cloud service spending just yet.

Tech market research company Canalys stated in a report released on Wednesday that “the Chinese cloud services market remains conservative, relying heavily on government and state-owned enterprises to drive growth.”

After a spike in interest in ChatGPT-like services, the training of AI models in the cloud has been predicted to propel the industry’s expansion.

Alibaba’s cloud division, which holds the biggest market share in the nation at 39%, saw only 2% revenue increase year over year for the quarter that ended on September 30. Additionally, the internet giant abandoned plans in November to make its cloud operations publicly listed.

Neither Hong Kong-listed Huawei nor the second-largest cloud company, Tencent, disclosed its cloud revenue for the third quarter separately. Huawei is not publicly traded. Tencent

The three biggest cloud providers in China maintained their market shares from the previous quarter, according to the Canalys research. However, the segment’s total growth slowed to 10% in 2022 and is predicted to reach 12% in 2023, which is significantly less than the 45% increase in 2021.

According to the research, domestic spending on cloud services increased to $9.2 billion in the third quarter, up 18% year over year.

However, based on CNBC’s examination of Canalys data, it fell sharply to 5.7% from 13% in the second quarter.

According to Canalys, 12% of the world’s cloud spending in the third quarter came from the mainland Chinese cloud market. According to a CNBC research, worldwide cloud spending increased 1.5% in the third quarter over the previous one.

The research group noted that the sector has been making “heavy” investments in AI and is attempting to monetize these capabilities by creating “partner ecosystems.” As to the research, this encompasses a network of software firms, specialists, and developers.

However, the cloud segment has not yet seen any significant growth as a result of this.

“The innate complexity of AI technology presents challenges in terms of adoption and deployment,” Canalys said, “yet simultaneously unlocks opportunities for a broader AI ecosystem.”

This year, Baidu and other Chinese companies have also developed AI models and products, along with Alibaba, Huawei, and Tencent.

(Adapted from BeamStart.com)

Categories: Economy & Finance, Strategy, Uncategorized