As the second Trump administration is set to begin, expectations are that regulations on semiconductors targeting China will intensify. Meanwhile, Chinese corporations are accelerating their artificial intelligence (AI) development, undeterred by this. There are assessments that the technology development in the AI sector, in which Chinese corporations have invested, is making progress in both hardware and software.
According to local media in China on the 30th, Chinese authorities have recently embarked on the third phase of the National Integrated Circuit Industry Investment Fund (Big Fund), which supports the semiconductor industry. The capital scale is 334 billion yuan (about 66 trillion won), which is more than the combined amount of the first and second phases.
While previous investment focused on semiconductor manufacturing, equipment, and component investments, there is a prospect that funding will be heavily directed toward computing chips and high bandwidth memory (HBM) starting from the third phase. Chinese media reported that the authorities are strengthening the domestic supply chain in anticipation of new regulations to be introduced by the Trump administration, led by the Big Fund. As part of this, on the 17th, the Chinese authorities allocated part of the Big Fund's assets to establish a separate AI-specialized fund worth about 60 billion yuan (about 12 trillion won), which will support funding for technology companies, including AI startups.
Huawei, a representative beneficiary corporation of the Big Fund, is keen on increasing the market share of its self-developed AI chip. Thanks to the 'domestic chip usage recommendation' issued by the Chinese government to major corporations, it is encouraging the purchase of its AI chip 'Ascend' for AI inference purposes. Inference tasks process actual data and generate results based on already trained AI models, which can be performed even with relatively lower-performing hardware.
To increase market share, Huawei is providing compatible software that enables AI models trained on Nvidia chips to be executed on Ascend chips. Dylan Patel, a senior analyst at semiconductor market research firm SemiAnalysis, noted, "Last year, Huawei's AI chip 'Ascend 910B' sold around 500,000 units in China, while Nvidia's GPU (graphics processing unit) for the Chinese market, 'H20,' sold about 1 million units. Recently, this gap has been narrowing rapidly." In addition, Chinese internet corporation Baidu and chip design specialist Cambricon have also shown remarkable achievements in AI chip development.
Not only in hardware but also in software, China's AI ambitions are currently ongoing. ByteDance, the parent company of TikTok, has significantly increased its AI expenditure this year. On the 23rd, Reuters reported that ByteDance has allocated $20 billion (about 29 trillion won) for capital expenditures this year and plans to use about half of that for AI data centers and network equipment. The company plans to secure a large number of Nvidia AI chips, including Huawei products, this year. So far, ByteDance has been the largest purchaser of Nvidia's 'H20' AI chips.
The industry anticipates that ByteDance will maintain its position as a leader in AI within China for some time while also making its presence known in overseas markets. ByteDance has more than 15 standalone AI applications, including the AI chatbot Doubao (豆包). According to Aicpb.com, which tracks AI product usage rankings, Doubao, launched in May last year, recorded 71.16 million monthly active users last month. While it falls short of the user count of OpenAI's ChatGPT (315.29 million), it ranks as the second-largest AI app globally.