Signs of AI can be seen at the World Artificial Intelligence Conference in Shanghai on July 6, 2023.
Ally Song | Reuters
BEIJING — Excitement about artificial intelligence hasn’t yet fueled a boom in cloud services spending in mainland China.
“China’s cloud services market remains conservative, relying heavily on the government and state-owned enterprises to drive growth,” tech market analysis firm Canalys said in a report Wednesday.
With growing interest in the potential of services like ChatGPT, training AI models on the cloud is expected to drive industry growth.
Alibaba’s cloud business, which has the largest market share in the country at 39%, reported only 2% year-on-year revenue growth for the quarter ended September 30. The tech giant also scrapped plans to list its cloud business in November.
Privately held No. 2 cloud player Huawei has not separately disclosed third-quarter cloud revenue, nor has Hong Kong-listed Tencent.
China’s three cloud giants maintained the same market share in Q3 as in the previous quarter, but the overall growth rate for this segment is expected to slow to 10% in 2022 and 12% in 2023. Masu. According to a report from Canalys, it will jump 45% in 2021.
Domestic spending on cloud services rose 18% year over year to $9.2 billion in the third quarter, the report said.
But it slowed significantly to 5.7% from 13% in the second quarter, according to a CNBC analysis of Canalys data.
According to Canalys, mainland China’s cloud market accounted for 12% of global cloud spending in the third quarter. Global cloud spending rose 1.5% quarter-over-quarter in the third quarter, according to a CNBC analysis.
The research firm noted that the industry is investing “significantly” in AI and aims to monetize AI products through the development of a “partner ecosystem.” This includes networks of developers, software companies and experts, the report said.
However, this has not yet led to meaningful growth in the cloud space.
“The inherent complexity of AI technology poses challenges in terms of adoption and deployment,” Canalys said, “while also unlocking opportunities for the broader AI ecosystem.”
Alibaba, Huawei, and Tencent have each released AI models and products this year, as has Baidu and other Chinese companies.