An artificial intelligence (AI) company has reportedly begun offering “AI-in-a-box” tools that businesses can run in-house.
This is a trend that threatens the AI cloud computing businesses of Chinese tech giants such as Alibaba, Tencent and Baidu, the Financial Times (FT) reported on Saturday (May 18).
Among the companies in question is Huawei, which has told more than a dozen AI startups to bundle its large language models with its AI processors and other hardware, according to the report. It is said that they are selling it after making it.
Huawei estimates that the market for so-called “all-in-one machines” in China will reach $2.3 billion this year. Minsei Securities analysts predict that the government market for AI boxes could reach $62 billion by 2027.
Dylan Patel, principal analyst at the research group Semi-Analysis, said some Chinese companies may want on-premises artificial intelligence, but that could mean using a public cloud or connecting to a large language model. He said that it is not as efficient as adopting an API for this purpose.
“Usage will be very sporadic, which means all of the very expensive AI hardware will not be properly utilized,” he said.
The FT report notes that this trend is in sharp contrast to the way AI is being commercialized in the West, and exploits Chinese companies' data protection concerns.
According to the report, a Chinese investment bank's research note claimed that OpenAI's ChatGPT accidentally exposed users' search history, and when a Samsung employee claimed to have leaked trade secrets to the chatbot. It is said that the security flaws of Western AI companies are being highlighted.
“Organizations need to be able to protect their data, and building a private cloud is the way to prevent valuable data from being leaked,” Liu Qingfeng, founder of language specialist company iFlytek, told potential clients.
Earlier this month, Baidu reported better-than-expected first-quarter results as investments in AI offset weaker online ad sales. Revenue from core businesses, including its flagship search engine and AI initiatives, rose 4% to 23.8 billion yuan, while revenue from the company's AI cloud division rose 6%.
“As the new era of Gen-AI unfolds in China, foundational models like ERNIE will serve as the underlying infrastructure,” said Robin Li, co-founder and CEO of Baidu. said in a news release.
The company has also expanded its ERNIE family of large-scale language models, aiming to make the technology more affordable and efficient.
