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ZTE woes may steer China’s AI chip development into a different direction

Written by KrASIA Writers Published on   2 mins read

Under special circumstances, a different way of thinking might be required of elite entrepreneurs.

Following ZTE’s setback, the weakness of China’s chip industry has also been brought into spotlight. The setback, though, also comes with a silver lining. As China doubles down on chip research and development, China’s AI chip companies are finding it easier to raise capital and get social support. In the VC circle, this phenomenon is jokingly dubbed “capital flows in as Trump issues bans”.

That said, the ZTE setback also holds the potential to steer China’s AI chip development into another direction as China and the United States duke it out for economic excellence and technological edge.

This is mirrored in the following aspects:

  1. Security & protection is among the major applications of AI chip. After the ban, there’s a possibility that the companies that focus on the overseas security & protection market will be restricted from winning security & protection projects in China. This may leave the security & protection companies bewildered about if they’d better concentrate on either the overseas or the domestic market in the short run until the “cloud” clears;
  2. A number of institutional investors suspected earlier that China’s AI chip companies might be taken over by overseas chip giants. Under current circumstances, whether or not the acquisition deals will be greenlighted still remains to be seen. But, one thing for sure is that the entrepreneurs with outstanding academic background and prominent status will be reluctant to hand their companies over to overseas companies;
  3. The developments mentioned above may eventually drive the AI chip companies towards BAT, prompting the AI chip companies to seek integration of their AI chips into BAT’s businesses.

Chances are, none of this would happen. Under this special circumstance though, these issues are what the elite entrepreneurs will ruminate on themselves.

In the future, cooperation may still feature prominently in Chinese–U.S. relation. And this may also be true for chip industry. At this point though, China and the United States need to find a way to thaw the tension between them. The worst case scenario? Wait until Trump’s term ends after 8 years.

Writer: SHI Yaqiong


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