Yvonne S. Sanders

December 27, 2023 - 06:00 am

The provided text outlines the current state of the cloud services market in China, particularly in relation to artificial intelligence (AI). Here are some key points from the text:

1. Conservative Growth in Chinese Cloud Market: The Chinese cloud services market is described as conservative, relying heavily on government and state-owned enterprises for growth. The growth in China's cloud market has slowed significantly over the last two years, following a 45% surge in 2021.

2.AI and Cloud Services Growth Expectations: The expectation was that training AI models on the cloud, particularly with the growing interest in services like ChatGPT, would drive the growth of the cloud services industry in China.

3.Performance of Key Players:

Alibaba Cloud: Despite having the largest market share at 39%, Alibaba Cloud reported just 2% year-on-year revenue growth in the quarter ended Sept. 30. Alibaba also scrapped plans to publicly list its cloud operations. Huawei and Tencent: Huawei, the second-largest cloud player, and Tencent did not separately state their cloud revenue for the third quarter. 4.Market Share and Growth Trends: The three largest cloud players in China maintained the same market share in the third quarter as in the prior one. Overall, the segment's growth slowed to 10% in 2022 and is expected to be at 12% in 2023, significantly lower than the 45% surge in 2021. 5.Domestic Spending on Cloud Services: Domestic spending on cloud services in China grew by 18% year-on-year in the third quarter to $9.2 billion. However, growth slowed drastically from 13% in the second quarter to 5.7%.

6.Global Cloud Spending and Market Share: The mainland Chinese cloud market accounted for 12% of the global cloud spend in the third quarter. Third-quarter global cloud spending rose 1.5% from the previous quarter.

7.Challenges and Opportunities in AI: The tech industry in China has been heavily investing in AI and looking to monetize AI offerings through the development of partner ecosystems. However, the complexity of AI technology presents challenges in terms of adoption and deployment.

8.AI Offerings by Key Players: Alibaba, Huawei, Tencent, and other companies in China have released AI models and products in the current year.

In summary, while there is significant interest and investment in AI and cloud services in China, the growth of the cloud market appears to be slower than initially anticipated, with challenges related to the complexity of AI technology and adoption.