Even the AI Boom Can't Save China's Cloud Sector

Revenue from cloud infrastructure services in the mainland grew 18% year-on-year to $9.2 billion in the third quarter of 2023, accounting for 12% of global cloud spending, according to market consultancy Canalys.

Alibaba Cloud, Huawei Cloud, and Tencent Cloud are the top three vendors, accounting for a total of 73% of the market. Alibaba leads with 39% market share, followed by Huawei and Tencent with 19% and 15% respectively.

01cdba74 60c7 4524 a893 9ec4cb916bb9 eb946167.jpeg — The AI boom has yet to bring solid profits to Chinese cloud companies.

Chinese cloud companies still rely heavily on the government and state-owned enterprises to drive growth, Canalys notes.

According to Wang Kai, senior equity analyst at stock market research firm Morningstar, the contribution from generative AI still accounts for only a small proportion of the core business of mainland cloud companies.

Still, the industry will continue to invest in advancing AI and addressing the challenges posed by the technology's complexity.

For example, Canalys analyst Zhang Yi said Chinese cloud companies are looking to build collaborative ecosystems that support service delivery.

“Without the cooperation of many service providers, it is almost impossible to achieve the goal of widespread deployment of AI technology,” Zhang asserted.

Meanwhile, some mainland cloud companies have provided their AI models and product development platforms to third-party developers to build applications for various traditional industries and specific business scenarios.

Baidu's chief technology officer Wang Haifeng said the company's AI development platform has more than 10.7 million developers building more than 86,000 AI models used across 23,500 companies.

Last year, Alibaba launched the ModelScope platform, which allows developers to train, refine, and deploy their own AI models.

(According to SCMP)

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