China overtakes US in AI startup funding with a focus on facial recognition and chips

The competition between China and the US in AI development is tricky to quantify. While we do have some hard numbers, even they are open to interpretation. The latest comes from technology analysts CB Insightswhich reports that China has overtaken the US in the funding of AI startups. The country accounted for 48 percent of the world’s total AI startup funding in 2017, compared to 38 percent for the US.

It’s not a straightforward victory for China, however. In terms of the volume of individual deals, the country only accounts for 9 percent of the total, while the US leads in both the total number of AI startups and total funding overall. The bottom line is that China is ahead when it comes to the dollar value of AI startup funding, which CB Insights says shows the country is “aggressively executing a thoroughly-designed vision for AI.”

China’s natural advantages in AI are well-documented. Compared to the US, it has a huge population (1.4 billion), which offers a wealth of data and opportunity for companies to scale quickly. Its AI sector also has the backing of a central government that’s able to quickly shift resources (as opposed to the missing-in-action White House), and the country’s looser approach to digital regulations means companies can experiment more freely.


China’s proportion of global AI startup funding as a percentage of dollar value.     Image: CB Insights

But these qualities can have downsides, too. The looser regulatory atmosphere, for example, is reflected by the fact that a major recipient of AI funding in China is facial recognition. This technology is widespread in the country’s cities, used for everything from identifying jaywalkers to allocating toilet paper. More significantly, it’s also been embraced by the government as a tool for surveillance and tracking. This is a technological advantage that US citizens probably wouldn’t want to replicate.

Along with facial recognition, CB Insights notes that China’s chip sector is also a big recipient of AI startup funding. New companies like Cambricon (which raised $100 million last August) are building processors designed to handle the demands of machine learning. But again, context is useful. Because while more money for AI chips may be going to China’s startups, in the US, it’s established companies like Qualcomm, Nvidia, and Intel that are pouring resources into the same cause.

In the US vs. China AI competition, even when we have numbers, it’s difficult (and probably impossible) to judge a “winner” — for now, anyway.

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