Translation 2019 Report on Current Conditions and Trends in the Artificial Intelligence Industry FORWARD Business Information Co., Ltd., Shenzhen (深圳前瞻产业研究院)

Translation 2019 Report on Current Conditions and Trends in the Artificial Intelligence Industry FORWARD Business Information Co., Ltd., Shenzhen (深圳前瞻产业研究院) September 2019 CSET produced and disseminated this English translation with the written permission of the author, 前瞻产业研究院 (FORWARD Business Information Co., Ltd.; a.k.a. Qianzhan Industry Research Institute). The original Chinese text of this report can be downloaded at:

Preface Artificial Intelligence is abbreviated in English as AI. The term "artificial intelligence" was first mentioned at a 1956 conference of the Association for Computing Machinery at Dartmouth, and thus far has a history of over 60 years. AI is an interdisciplinary field integrating computer science, physiology and philosophy. It is a new technical science that researches and develops theories, methods, technologies and application systems for simulating, extending and expanding human intelligence. Since 2015, AI has seen rapid development in China, and the Chinese government has introduced a series of policies to support development of AI, pushing Chinese AI to enter a new phase. During , AI has been continually mentioned in government work reports for three years in a row, and AI has risen rapidly from a national level to a strategic height. This explains why China's AI industry has already gone past the germination stage and the initial development phase, and will enter the rapid development phase, with greater attention to bringing applications to fruition. The rapid development of the last several years has also gradually clarified the domestic AI industry's upstream, midstream and downstream pattern. In that pattern, the upstream provides basic capabilities, the midstream converts basic capabilities into AI technology, and the downstream applies AI technology to specific industries. Shenzhen-based FORWARD Business Information Company's AI Industry Research Group, with its long-term focus on the AI Industry's development dynamics, is an active participant in the conferences and activities of the Shenzhen Artificial Intelligence Association and other authoritative organizations. It produces forward-looking analysis of the AI industry's development prospects and trends, combining the AI industry's supply chain structure, current market development situation, investment circumstances and typical cases, and issued the 2019 Report on Current Conditions and Trends in the Artificial Intelligence Industry. FORWARD Business Information Co. AI Industry Research Group

Table of Contents Analysis of the supply chain structure in China's AI industry Analysis of overall market development in China's AI industry Analysis of the current investment situation and trends in China's AI industry Case studies of typical start-ups in China's AI industry Analysis of the development outlook and trends of China's AI industry

Analysis of the supply chain structure in China's AI industry
The structure of China's AI supply chain Analysis of the foundation layer of Chinese AI Analysis of the technology layer of Chinese AI Analysis of the application layer of Chinese AI

1-1 The structure of China's AI supply chain
The AI supply chain consists of three layers: the foundation layer, the technology layer and the application layer. The foundation layer is the AI industry's foundation. It mainly consists of the R&D of hardware and software, such as AI chips, data resources, cloud computing and so on, and it provides data and computing power support for AI. The technology layer is the core of the AI industry. It constructs technical paths taking the simulation of human intelligence-related characteristics as the starting point. The application layer is the extension of the AI industry, in which one or more types of basic AI application technologies are integrated, and hardware/software products or solutions are created to meet the demands of specific application scenarios. Application Level Medical imaging Loan evaluation Robo-advisors Financial supervision Intelligent customer service Homework correction Intelligent question answering Remote tutoring Virtual classroom autonomous driving Traffic control Vehicle identification Vehicle detection Smart lighting Smart door locks Home robots Smart Internet of Things Intelligent cash registers Unmanned stores Intelligent distribution of goods Smart logistics Industrial robots Intelligent supply chains Intelligent operation and maintenance Product testing ... AI industry supply chain structure Remote diagnostics Drug discovery Disease prediction Smart medicine Smart finance Smart education Intelligent transportation Smart home Smart retail Smart manufacturing Technology layer Machine learning algorithms Brain-inspired algorithms Basic open-source frameworks Open technology platforms Computer vision Natural language understanding Intelligent speech Machine vision Algorithm theory Development platforms Applied technology AI chips Sensors Cloud computing Big Data 5G communications Data collection Labeling Analysis Basic layer Computing hardware Computing system technology Data Data source: Compiled by FORWARD Business Information Co.

1-2 Analysis of the foundation layer of Chinese AI
The foundation layer is the foundation of the AI industry, and it is mainly hardware and software, such as AI chips, data resources, and cloud computing platforms, providing data and computing power to support AI. It primarily includes computing hardware (AI chips, sensors), computing system technology (Big Data, cloud computing, and 5G communications) and data (data collection, labeling and analysis). AI supply chain foundation layer—composition and representative firms Computing hardware AI chips Big Data Basic layer Computing system technology Cloud computing 5G communications Data collection Data Labeling Analysis Data source: Compiled by FORWARD Business Information Co.

1-3 Analysis of the technology layer of Chinese AI
The technology layer is the core of the AI industry. It constructs technical paths taking the simulation of human intelligence-related characteristics as the starting point. It primarily includes algorithm theory (machine learning), development platforms (basic open source frameworks, open technology platforms) and applied technology (computer vision, machine vision, and natural language understanding). AI supply chain technology layer—composition and representative firms Algorithm theory Machine learning Basic open-source frameworks Technology layer Development platforms Open technology platforms Computer vision Applied technology Natural language understanding Intelligent speech Machine vision Data source: Compiled by FORWARD Business Information Co.

1-4 Analysis of the application layer of Chinese AI
The application layer is the extension of the AI industry, in which one or more types of basic AI application technologies are integrated, and hardware/software products or solutions are created to meet the demands of specific application scenarios. It primarily includes the medical, financial, education, transportation, household, retail sales, manufacturing, defense/security and government affairs fields. AI supply chain application layer—composition and representative firms Smart medicine Smart finance Smart education Application Level Intelligent transportation Smart home Smart retail Smart manufacturing Data source: Compiled by FORWARD Business Information Co.

Analysis of overall market development in China's AI industry
Analysis of development policies in China's AI industry Analysis of the current state of development in China's AI industry Analysis of the regional development of China's AI industry

2-1-1 Analysis of national-level AI industry development policies
Since 2015, AI has seen rapid development in China, and the state has introduced a series of policies to support development of AI, pushing Chinese AI to enter a new phase. In 2019, AI appeared in government work reports for the third consecutive year. Following the "accelerate the R&D and conversion of technologies such as artificial intelligence" and "enhance the new generation of artificial intelligence R&D applications" key phrases of 2017 and 2018, 2019 government work reports have used key phrases such as "deepen R&D applications such as Big Data and AI". From "accelerate" and "enhance" to "deepen", this explains why China's AI industry has already gone past the germination stage and the initial development phase, and in the next stage will enter a period of rapid development, with greater attention to bringing applications to fruition. Summary of national level AI policies as of July 2019 (I) Time Name of policy Main elements May 2015 Made in China 2025 Accelerate promotion of the integrated development of a new generation of information technology and manufacturing technology, taking smart manufacturing as the main line of attack in the deep integration of the two; concentrate on developing intelligent equipment and intelligent product manufacturing, promoting making the production process intelligentized (智能化). July 2015 Guiding Opinions of the State Council on Vigorously Advancing the "Internet Plus" Action Plan Lists AI as one of its 11 key action items. Specific actions are: cultivate and develop emerging AI industries; advance innovation of intelligent products in key fields; and raise the intelligentized level of end products. The main objective is to accelerate breakthroughs in core AI technologies, and the extension of AI to applications in smart home, intelligent terminals, intelligent cars, robotics, and other fields. March 2016 Outline of the 13th Five-Year Plan for the National Economic and Social Development of the People's Republic of China Accelerate development of applications of new information network technology, with key breakthroughs in technologies related to data and cloud computing, autonomous controllable operating systems, high-end industrial and large-scale management software, and AI technology in emerging fields, and inclusion of AI in planning outline for the Thirteenth Five-Year Plan. April 2016 Robotics Industry Development Plan (2016－2020) By the year 2020, annual output of industrial robots shall reach 100,000 units, and annual output of industrial robots with six or more axes shall reach 50,000 or more units. Annual sales of service robots will exceed RMB 30 billion; the levels of technology indicators for industrial robots will have reached the same products overseas; major breakthroughs will have been made in key parts used in robots, such as precision reducers, servo motors, and drives. May 2016 Implementation Plan for the Three-Year "Internet Plus" Action By 2018, build platforms for AI basic resources and innovation; the basic AI industry system shall essentially be built, there will have been breakthroughs in the basic core technologies, the overall technological and industrial development will have reached international parity, and some application and system-level technologies will have taken the lead. July 2016 National Plan for Scientific and Technological Innovation During the Period of the Thirteenth Five-year Plan Develop a new generation of information technology. In AI, emphasize the development of technologies and methods for Big Data-driven humanlike machine intelligence (类人智能), and make breakthroughs in the direction of humanlike machine intelligence based on Big Data analysis. September 2016 Special Action for the Innovative Development of the Intelligent Hardware Industry (2016- 2018) Emphasizes development of wearable smart devices, smart car devices, intelligent healthcare equipment, intelligent service robots, and industrial-class intelligent hardware devices. November 2016 The National 13th Five-Year Plan for the Development of Strategic Emerging Industries Develop AI, foster the AI industry ecosystem, and promote the comprehensive integration and penetration of AI technology in all industries. It specifically includes: accelerate building of the AI support system, promote applications of AI technology in various fields, encourage stronger integration of AI into various fields, and gradually achieve intelligentized upgrading. Data source: Compiled by FORWARD Business Information Co.

2-1-1 Analysis of national-level AI industry development policies
Summary of national-level AI policies as of July 2019 (II) Time Name of policy Main elements March 2017 2017 Government Work Report "AI" was included in a nationwide government work report for the first time: On one hand, it calls for accelerating cultivating emerging industries such as new materials, AI, integrated circuits, biopharmaceuticals, and 5G Mobile Communication, and on the other hand, technologies such as Big Data, cloud computing, and the Internet of Things should be applied to speed up the transformation and upgrading of traditional industries, taking the development of smart manufacturing as the main line of attack. July 2017 Notice of the State Council on Issuing the New Generation Artificial Intelligence Development Plan Defines the objectives of the three-step strategy to develop new generation AI, and raises AI to the national strategic level. By 2020, AI technology and applications will reach parity with the world's advanced levels, the scale of the AI industry will surpass RMB 150 billion, which will drive the scale of related industries to surpass RMB 1 trillion; by 2025, major breakthroughs will be achieved in basic AI theory, some technologies and applications will reach world-leading levels, and the scale of the core industry will surpass RMB 400 billion, driving the scale of related industries to surpass RMB 5 trillion; by 2030, AI theory, technology and applications overall will reach world-leading levels, and the scale of the core industry will exceed RMB 1 trillion, driving the scale of related industries to surpass RMB 10 trillion. October 2017 19th Party Congress Report AI is included in the 19th Party Congress Report, and deep integration of the Internet, Big Data, AI, and the real economy is to be promoted. December 2017 Three-Year Action Plan for Promoting Development of a New Generation Artificial Intelligence Industry ( ) Starting out from an industry development promotion perspective, integrate with "Made in China 2025," carry out detailed specification and implementation of tasks related to the New Generation Artificial Intelligence Development Plan, with the deep integration of information technology and manufacturing technology as the main theme and commercialization of new generation AI technology and integrated applications as a key point, and promote the deep integration of AI and the real economy. March 2018 2018 Government Work Report AI is again included in the government work report: Enhance the R&D and application of new generation AI; promote "Internet Plus" in multiple fields such as the medical, eldercare, education, cultural, and sports fields; and develop intelligent industries, expand smart living (智能生活). April 2018 Artificial Intelligence Innovation Action Plan for Institutes of Higher Education By 2020, basically complete the optimized layout of the academic discipline system and science and technology innovation system of institutions of higher education adapted to new generation AI, achieve breakthroughs by such institutions in the basic theory and R&D of key technologies for new generation AI, further improve talent cultivation and S&T R&D strengths, and promote the broad application of AI technology. November 2018 Work Plan Unveiling the Key Tasks for Innovation in the New Generation Artificial Intelligence Industry By segmentation of AI into main fields, select leaders and form a vanguard, establish benchmark enterprises, incubate a main force for innovation development, and accelerate the deep integration of China's AI industry with the real economy. March 2019 2019 Government Work Report AI is to be Intelligence+ (智能+). It is necessary to promote the transformation and upgrading of traditional industries. It is especially necessary to build industry Internet platforms, expand "Intelligence+," and enable the transformation and upgrading of the manufacturing sector. It is necessary to promote the rapid development of emerging industries, deepen the R&D and application of Big Data, AI, etc., incubate clusters in emerging industries like new generation information technology, high-end equipment, biopharmaceuticals, new energy cars and new materials, and enlarge the digital economy. Guiding Opinions on Promoting the Deep Integration of Artificial Intelligence and the Real Economy Grasping the characteristics of new generation AI development, combined with the characteristics of different industries and regions, explore paths and methods for applying the results of innovation, and construct a form of smart economy (智能经济) that is data-driven and features human-machine collaboration, cross-discipline integration, and joint creation and sharing. June 2019 Governance Principles for a New Generation of Artificial Intelligence: Developing Responsible Artificial Intelligence Highlighted the topic of developing responsible AI, and emphasized eight principles: harmony and friendliness, fairness and justice, inclusivity and sharing, respect for privacy, being safe and controllable, shared responsibility, open collaboration, and agile governance. March 2017 Report on the Work of the Government 2017 "AI" was included in a nationwide government work report for the first time: On one hand, it calls for accelerating cultivating emerging industries such as new materials, AI, integrated circuits, biopharmaceuticals, and 5G Mobile Communication, and on the other hand, technologies such as Big Data, cloud computing, the Internet of things should be applied to speed up the transformation and upgrading of traditional industries, taking the development of smart manufacturing as the main line of attack. July 2017 Notice of the State Council on Issuing the Development Plan on the New Generation of Artificial Intelligence Defines the objectives of the three-step strategy to develop new generation AI, and AI is raised to the national strategic level. By 2020, AI technology and applications will reach parity with the world's advanced levels, the scale of the AI industry will surpass RMB 150 billion, which will drive the scale of related industries to surpass RMB 1 trillion; by 2025, major breakthroughs will be achieved in basic AI theory, some technologies and applications will reach world-leading levels, and the scale of the core industry will surpass RMB 400 billion, driving the scale of related industries to surpass RMB 5 trillion; by 2030, AI theory, technology and applications overall will reach world-leading levels, and the scale of the core industry will exceed RMB 1 trillion, driving the scale of related industries to surpass RMB 10 trillion. October 2017 Report to the 19th CPC National Congress AI is included in the Report to the 19th CPC National Congress, and deep integration of the Internet, Big Data, AI and the real economy is to be promoted. December 2017 Three-Year Action Plan for Bolstering the Development of the new generation Artificial Intelligence Industry ( ) Starting out from an industry development promotion perspective, combine "Made in China 2025", carry out detailed specification and implementation of tasks related to the Next Generation Artificial Intelligence Development Plan, with the deep integration of information technology and manufacturing technology as the main theme and commercialization of new generation AI technology and integrated applications as a key point, and promote the deep integration of AI and the real economy. March 2018 Report on the Work of the Government 2018 AI is again included in the government work report: Enhance the R&D and application of new generation AI; promote "Internet Plus" in multiple fields such as the medical, senior care, education, cultural and sports fields; and develop intelligent industries and expand smart industries and smart life. April 2018 Artificial Intelligence Innovation Action Plan for Institutions of Higher Learning By 2020, basically complete the optimized layout of the academic discipline system and science and technology innovation system of institutions of higher education adapted to new generation AI, achieve breakthroughs by such institutions in the basic theory and R&D of key technologies for new generation AI, further improve talent cultivation and science/technology R&D strengths, and promote the broad application of AI technology. November 2018 Work Plan Unveiling the Key Tasks for Innovation in the new generation Artificial Intelligence Industry By segmentation of AI into main fields, select leaders and a form vanguard, establish benchmark enterprises, incubate a main force for innovation development, and accelerate the deep integration of China's AI industry with the real economy. March 2019 Report on the Work of the Government 2019 AI is to be Intelligence Plus. It is necessary to promote the transformation and upgrading of traditional industries. It is especially necessary to build industry Internet platforms, expand "intelligence plus", and enable the transformation and upgrading of the manufacturing sector. It is necessary to promote the rapid development of emerging industries, deepen the R&D and application of Big Data, AI, etc., incubate clusters in emerging industries like new generation information technology, high-end equipment, biopharmaceuticals, new energy cars and new materials, and enlarge the digital economy. Data source: Compiled by FORWARD Business Information Co.

2-1-2 Summary of the AI planning objectives of different regions
In addition, under the constant impetus of national-level policies, China's provinces and cities have put out a succession of Thirteenth Five-Year Plan-related AI plans suited to their local development environments. These have proposed 2020 development objectives for the scale of the core AI industry, accelerating development of the local AI industry, and promoting deep integration of AI with the real economy, and have provided a good policy environment for the development of China's AI Industry. Based on the specific industry scale development goals set, by province and municipality, as compiled by FORWARD, the scale goal for 12 of China's provinces and municipalities by 2020 is to reach RMB 429 billion, far exceeding the goal of RMB 150 billion set at the national level. Summary of 2020 AI industry scale goals of 12 Chinese provinces and municipalities (unit: 100 million yuan) Province Scale of core industry Scale of related industries driven [by core industry] Remarks Nationwide 1500 10000 Beijing 500 / Zhongguancun AI planning goals Hebei 200 1000 Liaoning 60 400 Jilin 50 Heilongjiang Shanghai Zhejiang 5000 2022 planning goals Anhui 130 450 Fujian Hubei 100 Wuhan AI planning goals Guangdong 3000 Sichuan Data source: Compiled by FORWARD Business Information Co.

2-2-1 Scale of China's AI industry market
In recent years, China's AI industry has developed rapidly, and voice recognition and computer vision have become the two most mature fields in the domestic AI market. Beginning in 2015, the scale of China's AI industry has grown year after year. According to data from the China Academy of Information and Communications Technology (CAICT), from 2015 to 2018, the compound annual growth rate was 54.6%, higher than the global average level (approximately 36%). By 2018, the scale of China's AI industry market had already reached RMB billion. Scale of China's AI industry, (unit: 100 million yuan) 450 415.5 400 350 300 Compound average rate of increase=54.6% 237.4 250 200 141.9 150 112.4 100 50 2015 2016 2017 2018 Data source: Compiled by CAICT and FORWARD Business Information Co.

2-2-2 Analysis of application fields among Chinese AI enterprises
According to data in the 2019 China New Generation Artificial Intelligence Development Report issued by the New Generation Artificial Intelligence Development Strategy Research Academy (新一代人工智能发展战略研究院) in May 2019, as of February 2019, AI enterprises were broadly distributed in 18 application fields, with the highest proportion of firms in two such application fields—enterprise technology integration and solution provision, and key technology R&D and application platforms—accounting for 15.7% and 10.5%, respectively. Distribution of Chinese AI enterprise application fields (unit: %) 15.70% 9.80% 9.40% 7.70% 6.70% 6.40% 5.80% 4.40% 3.20% 2.80% 2.70% 1.70% 0.80% 0.40% 10.50% Smart robots Smart banking Enterprise technology integration and solutions Smart security Smart home Smart logistics Smart cities Key technology R&D and application platforms Smart manufacturing Intelligent hardware Technology finance Intelligent education Smart agriculture Intelligent transportation Smart government New media and digital content Intelligent Connected Vehicles Smart commerce and retail sales Data source: Institute of New Generation Artificial Intelligence Development Strategies, compiled by FORWARD Business Information Co.

2-2-3 Analysis of the layers and technologies of Chinese AI enterprises
The distribution of Chinese AI enterprises is weighted toward the application and technology layers. As of February 2019, the percentage of application-layer AI firms was highest, being 75.20%; the technology layer was second with a percentage of 22.00%; basic-layer enterprises accounted for the smallest percentage, which was 2.8%. Looking at the distribution of AI firms by core technologies, those with Big Data/cloud computing and machine learning and recommendation as core technologies accounted for the highest percentages of firms, at 21.30% and 17.20%, respectively. Distribution of Chinese AI enterprises by core technologies (unit: %) Distribution of Chinese AI enterprises by lay (unit: %) Big Data/cloud computing Machine learning and recommendation 21.30% 17.20% Voice recognition and natural language processing 9.40% Face recognition, gait recognition, and facial expression recognition 8.60% Other 8.30% Hardware 8.10% Service robots 6.40% Industrial robots 5.80% Picture and image recognition 5.10% Drones 4.00% Other visual recognition 3.40% AI chips 2.00% Blockchain 0.40% Foundation layer 2.80% Technology layer 22.00% Application Layer 75.20% Data source: Institute of New Generation Artificial Intelligence Development Strategies, compiled by FORWARD Business Information Co.

2-2-4 Analysis of Chinese AI patent application quantities
According to statistical data from the World Intellectual Property Organization (WIPO), in 2018, the quantity of AI patent applications from China, the US and Japan accounted for 75% of the worldwide total. China led the US and Japan in the number of patent applications, accounting for 37% of the total. It is the global leader in the quantity of AI patent applications. Global distribution of AI technology patent applications in 2018 (unit: %) Other 13% Korea 3% Germany 9% China 37% Japan 13% United States 25% Data source: Compiled by WIPO and FORWARD Business Information Co.

2-2-5 Analysis of the current state of AI academic research in China
According to the Global Artificial Intelligence Industry Data Report issued by the China Academy of Information and Communications Technology (CAICT) in April 2019, in the nearly ten years from 2009 to 2018, the number of papers published worldwide in AI fields increased each year, and China's share has grown each year as well, reaching 27.4% in China publishes the greatest number of AI papers. It has published over 90,000 such papers in the last ten years, accounting for 22.7% of all AI papers published worldwide in that 10-year period. After China, the counties that published the most AI papers were the United States, followed by India, Germany and Japan. In terms of the number of paper citations, in the last 10 years, China has seen a significant increase in the number of highly cited papers in the field of AI; the number of highly cited Chinese papers in 2018 accounted for 45% of the global total. The United States was the country with the highest number of highly cited papers, followed by China, the UK, Germany, and Australia. Global distribution of cumulative AI papers published by country, (unit: %) Italy 3.60% Canada 3.60% Korea 3.70% China 22.70% France % United Kingdom 5.00% Japan 5.50% Germany 5.50% United States 20.40% India 5.80% Data source: Compiled by CAICT and FORWARD Business Information Co.

2-2-6 Analysis of China's AI talent cultivation system
Compared with foreign countries, cultivation of AI by colleges and universities in China started relatively late, but in recent years promotion of China's AI-related academic curricula and majors has speeded up, and a multi-level AI talent cultivation system has taken shape. In April 2018, the Artificial Intelligence Innovation Action Plan for Institutes of Higher Learning issued by the Ministry of Education proposed the basic completion, by 2020, of an optimized layout of the academic discipline system and science and technology innovation system of institutes of higher education adapted to new generation AI, with achievement of breakthroughs by such institutions in the basic theory and R&D of key technologies for new generation AI, further improvement of talent cultivation and science/technology R&D strengths, and promotion of the broad application of AI technology. In 2018, some 35 institutions of higher learning nationwide were in the first batch to obtain qualifications to establish AI major programs. As of the end of January 2019, there were 59 institutes of higher learning in China that had established AI schools or research institutes. Of those institutes, 32 had established AI schools, 19 had established AI research institutes, and 8 had established both AI schools and AI research institutes. Additionally, some leading corporations and top (independent or joint venture) institutes of higher learning had jointly established AI schools or key laboratories. Summary of AI schools cooperatively or jointly established by leading Chinese firms and institutes of higher learning Enterprise Cooperatively or jointly established AI school Cooperatively or jointly established AI school iFlytek Southwest University of Political Science and Law Artificial Intelligence Law School & Artificial Intelligence Law Research Institute Baidu (Beijing) Jilin University School of Artificial Intelligence Chongqing University of Posts and Telecommunications & iFlytek School of Artificial Intelligence Xiangjiang Artificial Intelligence School, Hunan Normal University Nanning University iFlytek School of Artificial Intelligence School of Artificial Intelligence, Henan Finance University School of Big Data and Artificial Intelligence, Anhui Institute of Information Technology MEGVII (Beijing) School of Artificial Intelligence, Nanjing University School of Artificial Intelligence, Jiangxi College of Application Science and Technology School of Artificial Intelligence, Xi'an Jiaotong University School of Artificial Intelligence, Chongqing Scientific Entrepreneur Vocational College DeepBlue Technology (Shanghai) Central South University-DeepBlue AI Joint Research Institute Tencent Technology (Shenzhen) Shenzhen University (Tencent Cloud) College of Artificial Intelligence Jiangsu University of Technology, DeepBlue School of Artificial Intelligence Liaoning Technical University Tencent Cloud School of Artificial Intelligence Shandong University of Science and Technology Tencent Cloud School of Artificial Intelligence Liaocheng University (Tencent Cloud) College of Artificial Intelligence Data source: Compiled by the Shenzhen Artificial Intelligence Association and FORWARD Business Information Co.

2-2-6 Analysis of China's AI talent cultivation system
Summary of newly established AI institutes in China, Number Name of institute Time established Region 1 Hubei University-Institute of Artificial Intelligence April 2016 Hubei Province 16 Tianjin University / Nankai University College of Artificial Intelligence May 2018 Tianjin Municipality 2 University of Chinese Academy of Sciences-School of Artificial Intelligence May 2017 Beijing Municipality 17 Hangzhou Dianzi University-School of Artificial Intelligence & Artificial Intelligence Research Institute Zhejiang Province 3 Tongji University-Artificial Intelligence Institute Shanghai Municipality 18 Harbin Institute of Technology-AI Research Institute Heilongjiang Province 4 School of Intelligent System Engineering, Sun Yat-sen University Guangdong Province 19 Institute of Artificial Intelligence, Tsinghua University June 2018 Beijing Municipality 5 Institute of Artificial Intelligence, Soochow University November 2017 Jiangsu Province 20 Chongqing Liangjiang College of Artificial Intelligence, Chongqing University of Technology Chongqing Municipality 6 School of Artificial Intelligence of Xidian University Shaanxi Province 21 Zhejiang Sci-Tech University Artificial Intelligence Institute 7 Beijing Jiaotong University-School of Artificial Intelligence December 2017 22 Institute of Artificial Intelligence, University of Science and Technology Beijing July 2018 8 Artificial Intelligence Institute of Shanghai Jiaotong University January 2018 23 Nanjing University of Aeronautics and Astronautics-College of Artificial Intelligence & Artificial Intelligence Research Institute 9 Hubei University of Technology-School of Artificial Intelligence 24 Beijing University of Posts and Telecommunications-Artificial Intelligence Research Institute 10 School of Artificial Intelligence, Nanjing University March 2018 25 Nanjing University of Science and Technology-School of Artificial Intelligence & Artificial Intelligence Research Institute 11 Institute of Artificial Intelligence and Data Science, Hebei University of Technology April 2018 Hebei Province 26 Yantai University-Institute of Artificial Intelligence Shandong Province 12 Changchun University of Science and Technology-School of Artificial Intelligence & Artificial Intelligence Research Institute Jilin Province 27 Nanjing University of Posts and Telecommunications-School of Artificial Intelligence September 2018 13 Tianjin Normal University-School of Artificial Intelligence Tianjin Municipality 28 Dalian University of Technology Artificial Intelligence Institute October 2018 Liaoning Province 14 Tsinghua University and Nanjing Municipality Nanjing Turing AI Institute 29 Fuzhou University-School of Artificial Intelligence & Artificial Intelligence Research Institute Fujian Province 15 Jilin University School of Artificial Intelligence Data source: Compiled by the Shenzhen Artificial Intelligence Association and FORWARD Business Information Co.

2-3-1 Regional distribution of China's AI industry
A heat map of the prospective AI industry distribution shows that AI firms are distributed mainly in four metropolitan areas: Beijing-Tianjin-Hebei, the Yangtze Delta, the Pearl River Delta and Sichuan-Chongqing. According to data from the New Generation Artificial Intelligence Development Strategy Research Academy, as of February 2019, China had a total of 745 AI firms. In terms of their regional distribution, the Beijing-Tianjin-Hebei, Yangtze Delta, Pearl River Delta, and Sichuan-Chongqing metropolitan areas accounted for 44.8%, 28.7%, 16.9% and 2.6% of AI firms, respectively. Heat map of the prospective AI industry distribution Regional distribution of Chinese AI enterprises (unit: %) 44.80% 28.70% 16.90% 7.00% 2.60% Beijing-Tianjin- Hebei Yangtze Delta Pearl River Delta Sichuan- Chongqing Other Data source: Institute of New Generation Artificial Intelligence Development Strategies, compiled by FORWARD Business Information Co.

Regional distribution of Chinese AI enterprises by layer (unit: firms) As of February 2019, there were 745 AI firms in the four metropolitan areas of Beijing-Tianjin-Hebei, the Yangtze Delta, the Pearl River Delta and Sichuan-Chongqing, representing 93% of all AI firms nationwide. In particular, looking at the regional distribution of AI by layer, the Beijing-Tianjin-Hebei region had the highest number of firms in the foundation layer, technology layer, and application layer, with 14, 76, and 248 firms, respectively, for a total of 338 firms. The Yangtze Delta region, at 212 firms, had the second highest number of AI firms, with the numbers of firms in the foundation layer, technology layer, and application layer being 3, 41 and 168 firms, respectively. The Pearl River Delta region had 126 AI firms, putting it in third place. Its numbers in the foundation layer, technology layer and application layer firms were 3, 31 and 92 firms, respectively. The Sichuan- Chongqing region had the fewest AI firms, with only 19 companies in all three layers combined. 248 168 92 76 41 31 14 13 3 3 1 5 Beijing-Tianjin-Hebei Yangtze Delta Pearl River Delta Sichuan-Chongqing Foundation layer Technology layer Application layer Data source: Institute of New Generation Artificial Intelligence Development Strategies, compiled by FORWARD Business Information Co.

As of February 2019, in the different provinces, municipalities and autonomous regions, AI firms were distributed mainly in Beijing Municipality, Guangdong Province, Shanghai Municipality, Zhejiang Province, Jiangsu Province, Sichuan Province, and Hubei Province. Among municipalities, AI firms were distributed mainly in Beijing, Shanghai, Shenzhen, Hangzhou, Nanjing, Guangzhou, and Chengdu. Distribution of Chinese AI enterprises by province, municipality and autonomous region (unit: %) 43.20% 16.90%14.90% 8.30% % 2.00% 1.90% 1.50% 1.20% 0.90% 0.80% 0.70% 0.50% 0.50% 0.40% 0.30% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% Hebei Province Zhejiang Province Jiangsu Province Sichuan Province Hubei Province Fujian Province Shandong Province Hunan Province Anhui Province Shanxi Province Guangdong Province Shaanxi Province Liaoning Province Hainan Province Guizhou Province Beijing Municipality Guangdong Province Chongqing Municipality Henan Province Heilongjiang Province Xinjiang Uyghur Autonomous Region Shanghai Municipality Distribution of Chinese AI enterprises by city (unit: %) 43.20% 14.90% 12.20% 7.20% 2.70% 2.60% 1.90% 1.70% 1.50% 1.30% 1.10% 0.80% 0.70% 0.50% Beijing Shanghai Shenzhen Hangzhou Nanjing Guangzhou Chengdu Suzhou Tianjin Wuhan Xiamen Changsha Ningbo Xi’an Chongqing Data source: Institute of New Generation Artificial Intelligence Development Strategies, compiled by FORWARD Business Information Co.

2-3-2 Analysis of AI industry development in Beijing
Beijing has clear advantages in terms of AI policies. Since 2016, Beijing has issued many related policy documents and service measures, providing strong support to the AI industry. As a "National Independent Innovation Demonstration Zone", Zhongguancun [District, in Beijing] has taken the lead in developing and trying out AI policies, advancing a policy of "one enterprise, one policy" for leading AI enterprises, and encouraging cooperation with international organizations in Silicon Valley, etc. The Beijing Municipal Guiding Opinions on Accelerating Science, Technology and Innovation to Nurture Artificial Intelligence Industries were formally released at the end of 2017, proposing that by 2020, new generation AI technology and applications overall shall reach advanced world levels, initially becoming a center of AI innovation with global influence. Besides the above two policies, Beijing has also established the Beijing Academy of Artificial Intelligence and a National Pilot Zone for Innovative Development of New Generation Artificial Intelligence. Summary of Beijing's AI-related policies Time Policy Content April 2016 Several Measures for Promoting Zhongguancun Intelligent Robot Industry Innovation and Development Formulates multiple measures to promote innovation and development in Zhongguancun's intelligent robot industry: accelerate building of a global intelligent robot innovation center; enlarge the forward-looking layout for intelligent robots; speed up promotion of core intelligent robot technology R&D and transformation of S&T achievements into commercial products (成果转化产业化); deeply promote the extension of intelligent robot product applications; support enterprise establishment standards and patent applications on the part of intelligent robot firms; strongly promote entrepreneurship incubation in intelligent robots; actively attract top-level international intelligent robot corporations and research institutions to set up regional headquarters and research centers; strongly promote development with the agglomeration of intelligent robot enterprises; gather together internationally first-rate, high-end leading talent and teams in intelligent robots; increase the level of financial support; and build international intelligent robot exhibition and exchange platforms. September 2017 Action Plan ( ) for Artificial Intelligence Industry Cultivation in Zhongguancun National Independent Innovation Demonstration Zone By 2020, Zhongguancun's technology innovation capability in AI fields shall be greatly increased, and an initial innovation ecosystem shall be formed with a high concentration of global innovation factors and synergistic development among innovation entities; the number of AI firms shall exceed 500, at least 5 firms shall be cultivated to become leading enterprises with international influence, at least 50 firms shall be leading enterprises in niche fields, and the scale of the industry shall exceed RMB 50 billion, which will drive the scale of related industries to exceed RMB 500 billion; and initial formation shall be achieved of an AI industry cluster that is internationally competitive and technologically dominant. December 2017 Guiding Opinions on Accelerating Science, Technology and Innovation to Cultivate the Artificial Intelligence Industry in Beijing By 2020, The overall technology and applications of Beijing's new generation AI will have reached advanced world levels, some key technologies will have reached world-leading levels, and some landmark results will have been achieved in major and original basic theory and cutting-edge technology. February 2019 Letter Regarding the Application to Establish a Beijing National Pilot Zone for Innovative Development of New Generation Artificial Intelligence Points out that the establishment of the pilot zone should: focus on the needs of major national strategies and Beijing's economic and social development, explore new paths and mechanisms to develop new generation AI, give rise to replicable and extendable experience, and exploit the important role that promotion of Beijing-Tianjin-Hebei's coordinated development and demonstration plays in driving nationwide AI innovation development; it also recommends that Beijing should fully exploit its advantages in having numerous top domestic research institutions and a concentration of expert teams in AI fields, enlarge and enhance its deployment in AI R&D, strengthen original innovation, expand application demonstrations, and strive to obtain a batch of internationally leading achievements in AI theory, technology and applications. May 2019 Fifteen Measures on Accelerating Zhongguancun Science City's AI Innovation-Led Development Includes strengthening original innovation (原始创新) capability improvement, concentrating on support of original innovation in key technologies, and encouraging investment in early phase and long-term development. Data source: Compiled by FORWARD Business Information Co.

2-3-2 Analysis of AI industry development in Beijing
Beijing's R&D advantages are clear, and it leads the nation in such fields as software platforms and autonomous driving. Firms are concentrated in application layer fields, with key points of focus on intelligent user-end products like robots and driverless vehicles, and vertical application fields like smart healthcare, smart education, smart home, autonomous driving, etc. Percentage breakdown of Beijing AI firms by supply chain layer as of June 2019 (unit: %) Percentage breakdown of Beijing's AI industry by key application scenarios as of June 2019 (unit: %) Foundation layer 11% Robots, driverless vehicles and other intelligent terminals 45% Smart home Smart healthcare 7% 13% Application Layer 58% 7% Technology layer 31% 11% Autonomous driving Smart education Data source: Compiled by the Shenzhen Artificial Intelligence Association and FORWARD Business Information Co.

2-3-3 Analysis of AI industry development in Guangdong Province
In April 2016, the General Office of the People's Government of Guangdong Province issued the Action Plan for Facilitating the Development of Big Data in Guangdong Province ( ), which proposed taking approximately 5 years to create a national data application forerunner zone and a Big Data Startup and Innovation Cluster Zone, seizing the high ground in data industry development, and creating a national Big Data comprehensive pilot zone with international competitiveness. In March 2018, Guangdong held a province-wide science and technology innovation conference to study next steps in laying out science and technology innovation tasks. The Guangdong Province New Generation AI Development Plan ( ) (Draft for Comments), introduced at the conference as one of the conference materials, put forward the goal of "becoming an internationally leading model city and strategic high ground in new-generation AI industry development." According to the plan, Guangdong will "proceed in three steps." In May 2019, the Shenzhen People's Government issued the Shenzhen Municipality New Generation AI Development Action Plan ( ), which proposed separate goals by 2020 and 2023, respectively. Summary of Guangdong Province's AI-related policies Time Policy Content April 2016 Guangdong Province Action Plan to Promote Big Data Development ( ) Supports innovation in natural language understanding, machine learning, deep learning, and other AI technologies. March 2018 Guangdong Province New Generation Artificial Intelligence Development Action Plan ( ) (Draft for Comments) Proposes the goal of "becoming an internationally leading model city and strategic high ground in new-generation AI industry development." According to the plan, Guangdong will "proceed in three steps": In 2020, the AI industry's overall competitiveness will be in the top ranks nationwide, which includes the scale of the industry core breaking past the RMB 50 billion mark, driving the scale of related industries to reach RMB 300 billion; by 2025, an internationally competitive, AI innovation-based industry cluster will be formed, and the industry core will surpass RMB 150 billion in scale, driving the scale of related industries to reach RMB 1.8 trillion; by 2030, the AI industry's development will have entered the high-end segments of the global value chain, becoming the cutting-edge frontier of technology innovation in the global AI industry, and quantum leaps will have been gained in development toward a smart economy and smart society. May 2019 Shenzhen New Generation Artificial Intelligence Development Action Plan ( ) By 2020, the scale, technological innovation capability and application demonstration effect of Shenzhen's AI industry will be at a leading level domestically, breakthroughs will have been made in key core technologies in some fields, a set of distinctive open innovation platforms will be built, AI will become an important engine helping to drive the innovation-based development of Shenzhen's industries and forming a new economic growth pole, and the AI industry's overall competitiveness will be in the front ranks nationwide. Establish 10 or more new innovation vehicles, organize and implement at least 20 major high-tech industry development projects, attract and cultivate 3－5 top international AI teams, 5－10 technologically leading research institutions, and incubate 10 leading enterprises in niche fields. The scale of core AI industry will break through the RMB 10 billion level, driving related industries to reach a scale of RMB 300 billion; by 2023, Shenzhen will have achieved breakthroughs in in basic AI theory, some areas of technology and applied research will have entered the world-leading level, and open innovation platforms will become benchmarks for leading the development of AI, strongly supporting the building of an international science and technology innovation center by the Guangdong-Hong Kong-Macau Greater Bay Area, which will become an internationally first-rate, leading region in AI applications. Initial establishment of an AI innovation system will be accomplished, and new AI industries, industry modes and business models will appear continuously. [Shenzhen] will establish at least 20 innovation vehicles, incubate at least 20 leading enterprises with technological innovation capability at a leading level domestically, and create 10 key industry clusters. The scale of the core AI industry will break through the RMB 30 billion level, driving related industries to reach a scale of RMB 600 billion. Data source: Compiled by FORWARD Business Information Co.

2-3-3 Analysis of AI industry development in Guangdong Province
In Shenzhen, the main place in Guangdong Province where AI firms are clustered, the pace of innovation and entrepreneurship is brisk, and the AI industry's development has been rapid. AI technology applications in Shenzhen show up mainly in application layer fields such as the consumer terminal, smart home, smart healthcare, autonomous driving, and AR/VR fields, and breakthroughs in the technology layer have been limited to some fields like computer vision and speech recognition. Percentage breakdown of Shenzhen AI firms by supply chain layer as of June 2019 (unit: %) Percentage breakdown of Shenzhen's AI industry by key application scenarios as of June 2019 (unit: %) Foundation layer 7% Robots, driverless vehicles and other intelligent terminals 55% AR/VR Smart home 4% 10% Technology layer 24% Application Layer 69% 5% 6% Autonomous driving Smart healthcare Data source: Compiled by the Shenzhen Artificial Intelligence Association and FORWARD Business Information Co.

2-3-4 Analysis of AI industry development in Zhejiang Province
Zhejiang Province has formulated a set of twelve talent policies. Released in July 2017, the Twelve Policies to Accelerate the Concentration of AI Talent in Zhejiang Province puts forward a 5-year timeframe in which to gather together 50 top international AI talented people, 500 high-tech startup talented people, 1000 high-end R&D talented people, 10,000 engineers and technicians, and 100,000 technical personnel. December 2017's Zhejiang Province New Generation Artificial Intelligence Development Plan proposed striving, by 2022, to incubate 20 domestically influential leading AI firms, form a core AI industry with a scale of at least RMB 50 billion, driving related industries with a scale of RMB 500 billion or more, and to lay a foundation for Zhejiang to be a nationwide AI industry leader. In January 2019, the Zhejiang Action Plan for Promoting the Development of New Generation Artificial Intelligence ( ) proposed: a digital economy-led approach with an advanced system layout, optimized top-level design, enhanced creativity, and a practical core foundation; development of AI software/hardware and intelligent terminal products, raising the level at which the manufacturing industry is intelligentized (智能化), improving construction of the public support system, promoting the deep integration of AI with the needs of economic and social development and human life, and advancing the high-quality development of new generation AI. Summary of Zhejiang Province's AI-related policies Time Policy Content July 2017 Twelve Policies to Accelerate the Concentration of AI Talent in Zhejiang Province Accelerate formation of an AI talent team, gather together 50 top international AI talented people, 500 high-tech startup talented people, 1000 high-end R&D talented people, 10,000 engineering and technicians and 100,000 technical personnel. December 2017 Zhejiang Province New Generation AI Development Plan By 2022, build [Zhejiang] into a leading area for national AI development and form a core AI industry with a scale of at least RMB 50 billion, driving related industries to a scale of RMB 500 billion or more. January 2019 Zhejiang Action Plan for Promoting Development of a New Generation of Artificial Intelligence ( ) Zhejiang Province will develop different aspects of AI, including technology, hardware, products, applications and talent, fight to make significant progress by 2022 in key fields, basic capabilities, enterprise incubation, support systems, etc., and become a nationwide leading region in the core technologies of new generation AI, a demonstration region for the industry's development, and a new high ground in innovation-based development. Data source: Compiled by FORWARD Business Information Co.

2-3-4 Analysis of AI industry development in Zhejiang Province
Hangzhou, Zhejiang was the first Chinese city to propose and explore "City Brain" (城市大脑), relying on the industry advantages of Alibaba, HIKVISION, and other corporations, taking "City Brain" applications as the opening for breakthroughs, and realizing aggregation effects for such application scenarios as smart retail, smart home, smart finance, intelligent transportation, intelligent manufacturing, and smart cities. Percentage breakdown of Hangzhou AI firms by supply chain layer as of June 2019 (unit: %) Percentage breakdown of Hangzhou's AI industry by key application scenarios as of June 2019 (unit: %) Foundation layer 10% Other 10% Intelligent transportation 3% Smart security 3% Smart education 3% Smart retail 4% AR/VR 5% Robots 50% Application Layer 60% Technology layer 30% Intelligent transportation 5% Autonomous driving 6% Smart healthcare 11% Data source: Compiled by the Shenzhen Artificial Intelligence Association and FORWARD Business Information Co.

2-3-5 Analysis of AI industry development in Shanghai
In November 2017, Shanghai Municipality issued the Implementation Opinions on the City's Promotion of the Development of New Generation Artificial Intelligence, which put forward development goals for 2020 and In December 2017, Shanghai issued the Detailed Implementation Rules for AI Innovation Development Project Support in Shanghai in order to carry out the relevant requirements of the national New Generation Artificial Intelligence Development Plan and accelerate the market extension and application of AI products. On September 17, 2018, at the 2018 World Artificial Intelligence Conference, Shanghai issued the Implementation Measures for Accelerating Promotion of High-Quality Development of Artificial Intelligence. The "Measures" include 22 policies to support talent building, data openness and application, industry coordination, industrial layout, government guidance, and investment/financial services. Summary of Shanghai's AI-related policies Time Policy Content November 2017 Implementation Opinions on the City's Promotion of the Development of New Generation Artificial Intelligence By 2020, achieve a scale exceeding RMB 100 billion for key AI industries, among which: the smart driving industry shall reach a scale of RMB 30 billion, the intelligent robot industry shall reach a scale of RMB 20 billion, the intelligent hardware industry shall reach a scale of RMB 20 billion, the intelligent software industry shall reach a scale of RMB 20 billion, and the smart core chip industry will reach a scale of RMB 20 billion; and breakthroughs shall be achieved in the commercialization of high-end intelligent sensors for industrial and consumer electronics applications, filling in domestic gaps. By 2030, the overall level of AI development will enter the advanced international ranks, and an internationally influential "high ground" in AI development will have been initially established. December 2017 Detailed Implementation Rules for AI Innovation Development Project Support in Shanghai In order to carry out the relevant requirements of the national New Generation Artificial Intelligence Development Plan, advance the development of Shanghai's AI industry and accelerate the market extension and application of AI products September 2018 Implementation Measures for Accelerating Promotion of High-Quality Development of Artificial Intelligence Proposed 22 specific measures centered around five aspects such as gathering together high-end talent, making breakthroughs in core technologies, and advancing demonstration applications. The new "22 Measures" AI policy pays particular attention to making full use of existing policies of various kinds, and increasing overall integration of funds, projects, and services. Data source: Compiled by FORWARD Business Information Co.

2-3-5 Analysis of AI industry development in Shanghai
Approximately 64% of firms in Shanghai are concentrated in the application layer. Intelligent robots, intelligent hardware, and autonomous driving are key elements of Shanghai's AI industry, and some firms already possess domestically leading technologies in computer vision, AI chip manufacturing, etc. Percentage breakdown of Shanghai AI firms by supply chain layer as of June 2019 (unit: %) Percentage breakdown of Shanghai's AI industry by key application scenarios as of June 2019 (unit: %) Foundation layer 8% Robots and other intelligent terminals 61% AR/VR Autonomous driving 4% 7% Application Layer 64% Technology layer 28% 7% Smart home Smart healthcare Data source: Compiled by the Shenzhen Artificial Intelligence Association and FORWARD Business Information Co.

Analysis of the current investment situation and trends in China's AI industry
Analysis of the scale of investment in Chinese AI Analysis of Chinese AI investment rounds Analysis of Chinese AI financing projects

3-1 Analysis of the scale of China's AI investment
From a global markets perspective, enthusiasm for artificial intelligence is closely tied to behind-the-scenes capital support. According to the Global Artificial Intelligence Industry Data Report issued in April 2019 by the China Academy of Information and Communications Technology (CAICT), in terms of the scale of financing, there has been a gradual decline since 2018Q2 in global investment intensity. In 2019Q1, the scale of global financing was US$12.6 billion, representing a year-on-year decline of 3.08%; of that total, the amount of financing in the China region was US$3 billion, representing a YoY decline of 55.8%. The China region accounted for 23.5% of total financing globally, which was 29 percentage points less than the same period in It is evident that China has become one of the most important players in the global AI field. In terms of individual financing amounts, China has received a cumulative 114 huge investments in AI fields since 2016, more than any other country. Scale of AI financing worldwide and in China, 2016Q1-2019Q1 (unit: US$100 million) 260 230 205 155 160 155 140 140 140 130 120 126 105 100 80 85 85 75 75 50 20 65 65 25 30 15 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 Worldwide (US$100 million) China (US$100 million) Data source: Compiled by CAICT and FORWARD Business Information Co.

3-1 Analysis of the scale of China's AI investment
Turning to the regional distribution, China and the US still account for the lion's share of global AI field financing. In the first quarter of 2019, their combined share of the total amount of financing and number of investments was 59% and 60%, respectively. The specific data show that, in the first quarter of 2019, AI field financing in China and the US was US$3 billion and US$4.4 billion, respectively, with 103 and 83 individual [huge] investments, respectively. Comparison of AI financing in China and the US in 2019Q1 (unit: US$100 million, investments) 120 103 100 83 80 60 44 40 30 20 China United States Financing amount (US$100 million) Number of investments (investments) Data source: Compiled by CAICT and FORWARD Business Information Co.

3-2 Analysis of Chinese AI investment rounds
It is worth noting that among financing rounds, the seed and angel financing round proportion has shrunk further, representing only 11.3% of the total in 2019Q1; the B-E financing round proportion rose from 23.2% in 2018 to 32.3% in the first quarter of The reason is that, following the gradual maturation of AI market segments, the seed/angel round investment proportion has gradually fallen as AI investment rounds retreated. B-E round proportion of global AI financing, Q1 (unit: %) 32.2% 23.2% 14.9% 15.1% 2016 2017 2018 2019Q1 Data source: Compiled by CAICT and FORWARD Business Information Co.

3-2 Analysis of Chinese AI investment rounds
AI fields saw a substantial number of large financing projects appear in China 2018, with over a hundred projects of more than RMB 100 million each. Eleven such projects had a financing amount in excess of RMB 1 billion each, including projects by industry stars like SenseTime, UBTECH, and MEGVII. It is evident that although the overall amount of financing has grown significantly relative to 2017, most of the funds have in fact concentrated upon relatively mature middle and late-stage projects, and even just in niche fields with a dominant giant, the trend toward concentrating capital at the top is clear. 2018 AI field financing projects with amounts over RMB 1 billion (unit: RMB 100 million) Name of Company Financing Round Financing Amount (RMB 100 million) SenseTime D round 193.75 Horizon Robotics B round 88.60 UBTECH C round 80.80 MEGVII 78.55 Cambricon Technologies 27.00 YITU Technology C+ round 25.48 iCarbonX Strategic investment 23.50 Unisound 22.85 Mobvoi 15.83 Geek++ B+ round 15.75 CloudWalk Technology 13.50 Data source: Compiled by FORWARD Business Information Co.

3-3 Analysis of Chinese AI financing projects
In terms of the global financing situation, in the first quarter of 2019, there were 16 deals worldwide that had financing in excess of US$100 million. China was the investment destination in 6 of those deals, the US had 4 of them, and Israel, Singapore, Germany, and Argentina each had 1 deal. Overall, Chinese firms ranked in first place both in the number of such investments and the amount of financing funds. Financing conditions of principle AI firms worldwide in 2019Q1 (unit: US$100 million, RMB 100 million) Name of Company Time Amount Country Horizon [Robotics] February 2019 US$600 million China 360 Enterprise Security Technology January 2019 US$900 million GDS March 2019 US$150 million MiningLamp US$2 billion Canaan Hundreds of millions of US$ Moviebook RMB 680 million Innoviz Technologies US$132 million Israel MercadoLibre US$750 million Argentina Grab US$1.460 billion Singapore Wefox Group US$125 million Germany Nuro US$940 million United States Desktop Metal US$160 million SpaceX US$273.2 million Regeneron Pharmaceuticals US$462 million Data source: CAICT, compiled by FORWARD Business Information Co.

Case studies of typical start-ups in China's AI industry
RISEYE MEGVII Unisound Note: At the August 2019 Global Artificial Intelligence Startup Conference, Forward interviewed key leaders of AI industry startups, and then carried out an analysis taking three startups—RISEYE, MEGVII and Unisound—as typical case studies.

4-1 RISEYE—Dedicated to serving all segments of the manufacturing industry
RISEYE Intelligent Technology (Shenzhen) Co., Ltd. has its headquarters at 9/F, Building B, Tongfang Information Harbor, Nanshan District, Shenzhen. It is a high-tech company specializing in the industrialized application of machine vision and AI technology in the manufacturing industry, and provides complete industrial vision intelligentized solution packages. It originated from the Shanghai Jiao Tong University Computer Vision Laboratory founded in 2000 by Professor Liu Yuncai (刘允才), a National Ministry of Education Chang Jiang Scholar. RISEYE's financing history Round Time of financing Amount of financing Investors A round 9/21/2018 RMB 45 million Bridge Capital (lead investor); Cowin Capital (co-investor) Pre-A round 2/27/2018 Tens of millions (RMB) Plum Ventures, Cowin Capital, Cyzone Angel round 3/30/2017 RMB 1 million Investor(s) not yet disclosed Data source: Rhino Data, compiled by FORWARD Business Information Co.

RISEYE products and services
4-1 RISEYE—Dedicated to serving all segments of the manufacturing industry Following the realization that industrial vision (工业视觉) has incomparable advantages next to the human eye when it comes to accuracy and repeatability, and that the core technology is continuously improving, the downstream application fields of industrial vision have seen constant expansion. RISEYE's main products include visual appearance inspection systems, 3D visual measurement systems, visual scan code recognition systems, and other cross-industry and universal standard products, as well as non-standard visual systems customized according to the needs of customers in different industries. It provides intelligent, high-efficiency, low-cost machine vision solutions for automation integrators, automation equipment manufacturers, and terminal manufacturing enterprises. Key fields served currently are: mobile phones, 3C electronics, PCB, automobile parts, packaging, printing, logistics, home appliances, plastics, and metallurgy. RISEYE products and services Turnkey solutions Whole-line solutions Industry-wide solutions and services Keyboard stand visual high-precision measurement system; Connector intelligent visual detection system; 3D visual high-precision detection system; Intelligent visual testing machine for camera modules; Optical filter classificatory-V generation; Online visual monitoring system for defects in outer packing; Keyboard geometric parameters automatic detection equipment …… Intelligent inspection machine for engine gasket appearance defects; Intelligent inspection system for remote control appearance defects; Online visual monitoring system for defects in medicine bottle outer packing; Printing quality intelligent visual detection system; Intelligent visual barcode reading system; Intelligent visual in-process inspection robot system; Steel coil surface defect detection system; Outer packing defect visual detection system …… Electronics industry defect detection; Hardware industry defect detection; Printing industry defect detection; Automotive electronics industry defect detection; Medical industry defect detection; Food industry appearance detection; Packaging industry quality inspection; Building industry dimension measurement …… Data source: Official company websites, compiled by FORWARD Business Information Co.

MEGVII's development history
4-2 MEGVII—Applying AI technology and computer vision algorithms in the IoT field Beijing Megvii Co., Ltd. (MEGVII) is a world-class AI enterprise with core competency in deep learning. MEGVII is a leader in the application of AI technology and computer vision algorithms in the IoT field. MEGVII's first commercialized AI product was a facial recognition solution. The Company's proprietary Brain++ deep learning framework functions as a unified underlying architecture and provides support tailored for the Company's algorithm training and model improvement processes. Leveraging its strong software-hardware integration capabilities, MEGVII offers full-stack solutions to its customers and has achieved leading positions in several key vertical markets, including personal IoT, city IoT, and supply chain IoT. MEGVII's development history November 2012 Face++ launched online October 2011 Beijing Megvii Co., Ltd. formally established August 2012 MEGVII obtains angel investment of several million yuan from Legend Star July 2013 MEGVII receives several million yuan in A round investment from Sinovation Ventures October 2013 Face platform launched online January 2019 In a strategic upgrade, the company name is changed from "Face++" to "MEGVII". Taking the logistics, manufacturing, and retail industries as starting points, it enters the IoT field targeting supply chain scenarios, and launches "HETU" (河图), a core robotics industry product. October 2017 Face++ formally completes C round with US$460 million in financing October 2014 Face++ has 14,000 partner Apps, and the number of monthly active devices covered reaches 40 million Data source: Official company websites, compiled by FORWARD Business Information Co.

4-2 MEGVII—Applying AI technology and computer vision algorithms in the IoT field
MEGVII DONGJIAN Smart City Management Operating System Our core goal is building a smart city brain (智慧城市大脑) based on world-leading computer vision algorithms and video Big Data analytics engines. We are committed to constructing a cloud-based collaborative digital urban management system through edge computing and the unified aggregation, analysis, and integration of multivariate data, deeply exploiting the potential of Big Data, and achieving refined management and resource optimization of cities. MEGVII HETU Robotic Network Operating System Dedicated to the rapid integration of robots in the logistics and manufacturing industries, with one-stop, full-process solutions for planning, simulation, implementation and operation. HETU features hardware ecosystem connection, collaborative intelligence, and digital twins. It is currently connected to MEGVII-designed and produced intelligent robots, as well as multiple kinds of access devices. It has already greatly reduced planning, implementation, operation, and maintenance costs in warehousing and manufacturing, and has boosted overall efficiency. MEGVII AI Products—Two Big Systems City Management Smart Communities Transportation Hubs Customs Border Inspection Warehousing Logistics Factory Manufacturing MEGVII HETU Robotic Network Operating System MEGVII DONGJIAN Smart City Management Operating System Lead computing By empowering front-end devices with AI algorithms, creating an intelligent front-end with multi-dimensional perceptual data collection, and closer proximity to scenarios, business handling response is more rapid. Multi-source integration Big Data is integrated across multiple dimensions including human faces, human form, vehicles, physical articles, times, locations, etc. using Big Data-based logical reasoning and correlation analysis, for deep mining of correlations and relationships between data, thereby achieving “prediction, warning and prevention”. Ecosystem connection Through HETU, it is possible to connect up to multiple business systems, and connect down to all kinds of intelligent robots and automated equipment, gathering abilities into one ecosystem. Digital twins HETU is a full-process operating system for everything from design and planning to simulation, deployment and operation/monitoring. It can digitally mirror real-world production scenarios and achieve cost reductions and efficiency gains. Cloud collaboration Computational efficiency is improved through AI cloud computing and intelligent front-end collaborative processing, deep computing is carried out with dynamically optimized allocation of computing resources, and data is distributed to the front end more precisely, achieving synchronized decision-making and execution. Collaborative intelligence When multiple devices are dynamically linked to accomplish a common task, intelligent collaboration is still needed. HETU empowers industries by providing intelligent algorithms for path planning, slotting optimization, load balancing, job scheduling and more. MEGVII DONGJIAN—Smart City Management Operating System MEGVII HETU—Robotic Network Operating System Data source: Official company websites, compiled by FORWARD Business Information Co.

MEGVII has created a core hardware ecosystem based on sub-IoTs for different industry scenarios. With its MegEye smart sensing, MegBox smart computing and MegMaster intelligent robot lines of hardware products, MEGVII provides customers closed-loop business value through solutions that combine software and hardware. MEGVII AI products—core hardware MegEye smart sensing series MegBox computing series MegMaster robot series The MegEye sensing line is a series of proprietary AI- powered smart sensing hardware devices. Equipped with high-quality AI algorithms, MegEye is capable of dynamic facial detection and recognition, large-scale real-time facial comparisons and recognition, and human attribute recognition. It can be deployed in various settings such as urban management, traffic checkpoints, buildings, and industrial parks. The MegBox computing line is a series of proprietary AI-powered smart computing hardware devices. Equipped with MEGVII's world-class AI algorithms, it features multi-channel video streaming access, a large base, life detection, high-density human facial recognition and comparisons, and customized software development. It can be used in a wide variety of computer-related scenarios. The MegMaster robotics product line is a series of proprietary AI-powered smart robot hardware devices developed by MEGVII. Based on MEGVII's high-quality AI algorithms and robot technology, MegMaster is capable of handling, sorting, lifting and storing. It is widely employed in operations such as logistics, warehousing, shop floor management, and manufacturing.. Data source: Official company websites, compiled by FORWARD Business Information Co.

MEGVII's smart solutions and intelligent data services cover many important areas, including mobile Internet, finance, security, real estate, retail sales, and office work, and it has achieved deep partnerships with institutions, government departments, and corporations, such as China Mobile, CITIC, SINOPHARM, Tsinghua University, the Hangzhou Metro, OPPO, and IT Logistics. MEGVII partners Data source: Official company websites, compiled by FORWARD Business Information Co.

4-3 Unisound—Intelligent speech recognition AI technology company
Unisound is focused on IoT AI services and owns completely independent intellectual property rights. It is one of the world's leading intelligent speech recognition AI technology companies. The company was founded on June 29, Its headquarters is in Beijing, and it has established branches in Shanghai, Shenzhen, and Xiamen. Unisound has used its machine learning platform to establish a leading core technology system in the fields of voice technology, language technology, knowledge computing (知识计算), and Big Data analysis. These technologies together constitute a complete AI technology map for Unisound. Unisound currently has more than 20,000 partners, covering 200 million users, including over 470 cities with open voice clouds and over 90 million devices. Unisound's financing history Round Time of financing Amount of financing Investors D round 3/30/2019 Not yet disclosed Orient Securities, China International Capital, Wellspring Capital C+ round 7/19/2018 RMB 600 million China Internet Investment Fund (lead investor); CICC Jiacheng, JIC Capital (co-investors) C round 5/11/2018 US$100 million CEC Health Fund (lead investor); Qihoo 360, Qianhai Wutong Buyout Investment Fund, Hanfor Capital (co-investors) Strategic investment 8/17/2017 RMB 300 million JD Finance, Qihoo 360, Infore Holding, Sichuan Venture Capital B+ round 4/23/2016 Tens of millions (US$) ZJU Joint Innovation Investment B round 12/18/2014 US$50 million Qualcomm Ventures, Qiming Venture Partners A round 10/13/2013 Qiming Venture Partners, Grains Valley Venture Capital Angel round 10/1/2012 RMB 10 million Investor(s) not yet disclosed Data source: Rhino Data, compiled by FORWARD Business Information Co.

Unisound's AI products and services are of eight main types: industrial service robots, smart home solutions, intelligent vehicle solutions, smart healthcare solutions, smart education solutions, early childhood education robot solutions, DiGu (嘀咕)-intelligent telephone robots, and Congcong (聪聪) AI educational companion robots. Unisound's AI products and services Congcong AI educational companion robots Industrial service robots DiGu-intelligent telephone robots Early childhood education robot solutions Smart home solutions Intelligent vehicle solutions Smart education solutions Smart healthcare solutions Data source: Official company websites, compiled by FORWARD Business Information Co.

With the help of a cloud computing platform and mobile Internet technologies, Unisound achieves interconnection and interaction between users and devices, and between devices and other devices, in a broad array of fields such as mobile Internet, smart home appliances, wearable devices, vehicle navigation, healthcare, education and call centers, and helps traditional industries become more Internet-integrated. Unisound core AI technologies Speech recognition Semantic understanding Speech synthesis Voiceprint recognition Offline control Data source: Official company websites, compiled by FORWARD Business Information Co.

Unisound platform advantages Unisound platform users Full-service AI It uses a one-stop approach to provide world-leading levels of voice, image, semantic understanding, translation, voiceprint, fingerprint, face, and other intelligent technologies. Cloud, terminal and chip-based intelligent voice products Users enjoy one-stop smart living with mobile Internet, online education, smart customer service, smart television, and smart chips, developed based on Unisound's cloud platform. Perfected developer support Terminal support is comprehensive, and there is a wide range of solutions to choose from and an easy-to-use development kit, with detailed and complete documentation, professional and effective technical support, and accurate data support for statistical analysis. Private cloud & customization Private storage service can be set up, offering full control of voice data and the ability to be used purely within a LAN. Data source: Official company websites, compiled by FORWARD Business Information Co.

Analysis of the development outlook and trends of China's AI industry
Analysis of the development outlook of China's AI industry Analysis of development trends in China's AI industry

5-1 Analysis of the development outlook of China's AI industry
The basic requirements for China's AI industry are already in place, and with the accelerated rollout of related policies, the industry will be pushed to enter a new stage of development. According to FORWARD's summary of forecasts by authoritative domestic and overseas institutions of the scale of Chinese AI in 2020, the optimistic prediction for 2020 is that the scale of China's AI market will surpass RMB 160 billion; the middle-of-the-road prediction for 2020 is that China's AI market will be roughly RMB billion. Forecasts by authoritative domestic and overseas institutions of the scale of Chinese AI in 2020 (unit: RMB 100 million, US$100 million) Name of institution Scale of Chinese AI in 2020 Domestic institutions China Academy of Information and Communications Technology (CAICT) RMB 71 billion Tencent Research Institute RMB 80 billion Shenzhen Artificial Intelligence Association RMB 99 billion 2018 China IT Market Annual Conference RMB 160 billion Foreign institutions Gartner US$16.0 billion (approximately RMB 104 billion) CB Insights US%20 billion (approximately RMB 130 billion) Data source: Compiled by FORWARD Business Information Co.

5-1 Analysis of development trends in China's AI industry
Global-level trends in new generation AI industry development AI's economic potential will gradually become evident As investment by different governments and industries continues to mount, the increasing maturity of AI technologies will bring with it more new products and services. AI-driven automation will cause total factory productivity growth to rise, and the industry will experience explosive growth. International competition in AI will steadily intensify In recent years, countries around the world have issued AI plans, policies, and investment plans in close succession, enhancing their AI layout at the national strategy level, and setting the stage for a new round of international technological competition to appear. China has already become an AI power (人工智能大国). In the future, it will further deepen its participation in global AI industry cooperative competition (合作竞争), becoming a major promoter of AI. Tre nds Breakthroughs in the intelligence levels of AI will continue unabated Brain-inspired intelligence (类脑智能) is all but ready to go, and a number of countries are currently beginning "brain science research." The incubation of quantum intelligence will accelerate: It is already globally accepted that it represents the next generation of computing technology, and it will bring about revolutionary development opportunities for artificial intelligence. AI-related social issues will become increasingly pronounced With the gradual incorporation of AI into society, AI security risks and social governance issues will gradually be placed on the agenda. Data source: Compiled by FORWARD Business Information Co.

5-2 Analysis of development trends in China's AI industry
For AI technology, the next ten years will be an explosive period of accelerating popularization. AI product manufacturing will be realized in various fields, AI will penetrate progressively into daily life, and the scale of the industry will increase greatly. AI also has significant spillover effects which will drive continuous advances in other related technologies, helping to promote the transformation and upgrading of traditional industries and overall breakthroughs in strategic emerging industries. Following China's release of the Catalog for Guiding Industry Restructuring (Draft for Comments), the AI industry has developed in a healthy direction. In the future, AI will exhibit four main development trends: Development trends in China's AI industry AI product manufacturing will be achieved in various fields The achievement of AI product manufacturing in different fields will be the main trend in the future of China's AI industry development, and AI will materialize in a growing number of application scenarios. AI will increasingly permeate daily life With smaller devices and sensors operating closer to the periphery of computer networks, AI, in combination with IoT and smart devices, will gradually penetrate further into people's daily lives. The AI industry will continue to grow healthier The 2019 catalog for AI industry structural adjustment calls for encouraging establishing AI standard tests and IPR service platforms. This would solve problems in China's AI industry owing to the lack of uniform standards and a basic framework for evaluation and review, and further promote the healthy development of China's AI Industry. AI technology will have a severe impact on labor-intensive industries AI will push labor-intensive industries to another peak, greatly reducing costs and increasing efficiency, but at the same time that labor is being saved, the demands on people's work abilities will also increase greatly, and many jobs will be undermined. Data source: Compiled by FORWARD Business Information Co.

FORWARD Business Information Co. Forward Economist
FORWARD Business Information Co. is the leader in Chinese industry consulting！ A subsidiary of Shenzhen Forward Intelligence， Inc., the Institute was established in 1998 in the Tsinghua Garden of Beijing. It is dedicated mainly to providing industry consulting, industry planning, industry upgrading and transformation consulting and solutions to corporations, governments and scientific research institutes. Forward Economist Gives you the edge in understanding trends The Forward Economist APP (前瞻经济学APP) is an industry and economic data + information aggregation platform established on the strength of FORWARD Business Information Company. It is targeted mainly toward middle and upper management in all companies, financial industry workers, economists, the Internet technology industry and other groups, and provides global industry hot spots, Big Data analysis, industry research reports, project investment dissection and knowledge bases, and researchers' articles. Creative team: Xu Shuo (徐烁), Mu Xiaofei (穆晓菲), Zhu Xi (朱茜) Report created by: FORWARD Business Information Co. Find more reports at: Report contact number: Industry planning consultancy:

Translation 2019 Report on Current Conditions and Trends in the Artificial Intelligence Industry FORWARD Business Information Co., Ltd., Shenzhen (深圳前瞻产业研究院)

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Translation 2019 Report on Current Conditions and Trends in the Artificial Intelligence Industry FORWARD Business Information Co., Ltd., Shenzhen (深圳前瞻产业研究院)

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Presentation on theme: "Translation 2019 Report on Current Conditions and Trends in the Artificial Intelligence Industry FORWARD Business Information Co., Ltd., Shenzhen (深圳前瞻产业研究院)"— Presentation transcript:

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