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According to IDC, China’s AI Market Will Exceed US$26.7 Billion by 2026

News Desk by News Desk
October 6, 2022
According to IDC, China’s AI Market Will Exceed US$26.7 Billion by 2026

Image Credit: Pixabay

IDC’s latest Worldwide Artificial Intelligence Spending Guide shows that the total global IT investment in artificial intelligence (AI) in 2021 was US$92.95 billion, predicted to rise to US$301.43 billion in 2026, and the compound annual growth rate (CAGR) was about 26.5%. As for the China market, IDC forecasts that China’s AI investment to reach US$26.69 billion in 2026, accounting for about 8.9% of global investment, ranking second in the world among other countries. 

In the current scenario, more businesses have become involved in the Digintelligence Era and begun deploying digital transformation (DX) and intelligent upgrading, which has thus spawned more demand for AI. AI empowering industries is becoming a mainstream development trend driven by policies, technologies, and markets.

Technology Dimension

Over the next five years, the hardware market will be the largest primary market in China’s AI, accounting for more than half of the total AI investment. IDC predicts that China’s IT investment in the AI hardware market will exceed US$15 billion in 2026, close to that of the AI hardware market size of the United States. With the gradual improvement of AI infrastructure construction, hardware growth will gradually slow down, with the five-year CAGR remaining around 16.5%. The server market, as the main part of the hardware market, will account for over 80% over the five-year forecast period.

At the same time, the services market will expand faster, with the five-year CAGR expected to be about 29.6%. Total investment in the services market is expected to exceed US$4 billion in 2026, nearly four times the investment in 2021, with significant market growth. The AI services market as defined by IDC is mainly dominated by the IT services segment. IDC predicts that IT services will lead the services market growth at a five-year CAGR of 31.0%.

From the perspective of AI software, under the joint promotion of the gradual development of technologies, including machine learning (ML) and computer vision, China’s policy environment, and the gradually diversified customer needs, China’s AI software market share will increase year by year. More than 25% of the AI market–related IT investment will flow to software in 2026. In terms of growth rate, the AI software market will become the fastest-growing primary market during the five-year forecast period, with a five-year CAGR of about 30.4%. From the perspective of the technology segment, AI platforms will absorb more than 70% of software-related spending over the next five years and will become an important driving force for software market growth at a five-year CAGR of 33.1%.

Industry Application

IDC predicts that the AI-related spending of users in the four major endpoint industries — professional services, government, finance, and telecom — will continue to lead over the five-year forecast period, collectively exceeding 60% of the total spending of China’s AI market. Specifically local governments. AI spending will lead AI investment growth with a five-year CAGR of 24.3% and is expected to exceed US$2.51 billion in 2026, and it is expected that the central government will have a five-year CAGR of 19.4% and reach US$1.37 billion in 2026. The market size of the financial sector represented by banks will continue to grow over the next few years, with the five-year CAGR expected to exceed 21.0%. In addition, the construction, discrete manufacturing, and healthcare industries have also achieved high growth rates, jointly promoting the development and application of China’s AI. In the future, AI will be applied in various industries, expanding in width and depth. It will further effectively support the industries to achieve intelligent marketing and decision-making. At the same time, the deep integration of AI with industries will stimulate more potential and foster more business opportunities.

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Based on research conducted on the industries mentioned earlier, IDC Worldwide Artificial Intelligence Spending Guide covers 29 typical key AI use cases, which will be updated to reflect the market dynamics. Three use cases, namely, augmented customer service agents, public safety and emergency response, and smart business innovation and automation, will continue to remain dominant. The three together will account for more than 30% during the five-year forecast period. Currently, there are mature applications of AI in various industry use cases. 

It completes independent judgment and behavior learning through technologies, such as deep learning, computer vision, and image recognition, to solve various complex tasks, laying an important foundation for the intelligent transformation of the industry. Customer service agents are developing rapidly in use cases, with cases in finance, retail, and other industries. Public safety and emergency response are mainly involved in government security, and biometrics is used for fingerprint and face recognition. With the increasing development of AI chips, 5G, and other technologies, AI will be better implemented in more fields.

Source: IDC

Also Read: What can AI Cloud do for Enterprises?

News Desk

News Desk

by CXO VOICE team memebrs, [email protected]

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