AI algorithms are the foundation of the development of speech-based systems and chatbots, they help to predict production downtimes and support doctors in recognizing and treating diseases. AI algorithms save time and money. More often than not, they even make better decisions than their human counterparts.
Sometimes, people ask whether or not AI is only a hype, because methods like neuronal networks have existed for decades. While this observation is correct, I am nonetheless convinced that AI is – unlike in many digital transformation projects – not only a buzzword.
The reason why AI is experiencing such a boom is because the corresponding framework has improved immensely over the last couple of years. Now, data needed to, for example, train neuronal networks is abundantly available. Computing power and memory space are cheaper than ever before.
What is more, for the first time ever, there are many free toolkits and software libraries which greatly simplify and improve the development and quality of applications.
Artificial intelligence is more than just a tool for the automation of existing processes. In the future, the creation of new data-based business models will be the focus.
Investments in AI
A strong indication for its ever-increasing importance is the growing figure of investments in AI technology. From 2011 to 2017, the investments in AI start-ups have grown to over 15 billion U.S. dollars (CB Insights, 2018). By 2020, experts expect the number to have grown even more to 70 billion dollars (OECD, 2017). This shows that it is a growing trend to invest in AI.
However, these investments in AI start-ups are not evenly distributed. 48 percent of them have been coming from China, followed by the U.S. with 38 percent. The rest of the world only accounts for 14 percent (2 billion dollars) of investments in new AI companies.
Even though Germany is home to many excellent AI scientists, the country is not even the frontrunner in Europe. Great Britain is number one, where start-ups like Darktrace (cybersecurity) and Graphcore (AI chips) have become financial unicorns, meaning they are valued at over one billion dollars.
U.S. versus China
In the U.S., mostly privately owned companies are the ones investing in AI, for example Amazon, Google, IBM and Nvidia. In China, however, the government is the one spending billions of dollars on this technology. With a three step plan, China plans to become global market leader in AI in 2030.
At the moment, a lot of money is put into the development of AI companies there. The aim is to achieve great technological breakthroughs in the fields of medicine, agriculture, infrastructure and industrial production over the next decade.
While Americans tend to invest here and there without a clear strategy in mind, China’s investments are more goal-oriented. The government invests in few, but already developed start-ups. As a result, five of the seven most valuable new companies are from China.
Sensetime is at the top, valued at 4.5 billion dollars, followed by Cambricon (2.5 billion) as well as Megvii/Face++, CloudWalk and Yitu (each 2.5 billion), filling up the ranks from three to seven.
It’s high time that the rest of the world follows suit. A constructive examination and interaction with artificial intelligence are a must if we do not want to fall behind on one of the most important technologies of the future.