\t\t\t\t\tSign up to see the future, today<\/p>\n
Can\u2019t-miss innovations from the bleeding edge of science and tech<\/p>\n
As economists in the rest of the world look at the billions being poured into the AI industry with their hands over their eyes, the fate of China\u2019s AI industry may be a sign of things to come.<\/p>\n
A report from Reuters<\/a> suggests that the AI bubble in China \u201chas already burst.\u201d Or it might be more apt to say that it shriveled like a rapidly deflating balloon: over the past four months, Reuters notes, the country\u2019s STAR50 index of AI and semiconductor companies collapsed by 40 percent, wiping out $480 billion in market value. That is not a typo.<\/p>\n \u201cThe stock market later evolved into a speculative crazy bull,\u201d Beijing-based fund manager Dong Baozhen told Reuters. \u201cAnd now we see the bubble bursting.\u201d<\/p>\n Shares of Unitree, China\u2019s buzzy robotics company<\/a>, have halved since the company went public in a much-hyped IPO in August, the reporting noted. The chipmaker CXMT, meanwhile, has lost more than a quarter of its value over the past month.<\/p>\n The vicissitudes of the stock market haven\u2019t completely dampened AI investors\u2019 spirits, though. DeepSeek, one of China\u2019s top AI companies, recently raised $15 billion in one of the largest funding rounds in the country\u2019s history, Bloomberg reported<\/a>. The outlet also noted<\/a> that Huawei clinched a $2.3 billion loan from Chinese banks to spend on more AI chips.<\/p>\n The conditions in China, of course, are different than elsewhere in the world. China faces constant efforts from the US to ice it out of global competition, with tariffs and the US considering an outright ban on Chinese companies supplying equipment to data centers, such as Zhongji Innolight, whose optical transceivers are critical for facilitating the light-speed transfers of the epic amounts of data that AI requires. It\u2019s worth noting that the role of the economic hostility by the US and other western countries in the Chinese market downturn could be being understated, with the downturn as much a consequence of China being blocked from selling its AI products overseas<\/a> as much as it is of market arrogance.<\/p>\n Still, the scale of money being poured into AI and AI-related industries \u2014\u00a0with AI stocks taking up some 42 percent of China\u2019s market capitalization, according to Goldman Sachs\u00a0 \u2014 isn\u2019t too dissimilar to what\u2019s happening in Western economies, where the obvious lack of a return of investment becomes harder to ignore. Anthropic\u2019s recent disclosure in its IPO filing of a staggering $80 billion loss<\/a> \u2014 and plans to spend another $1 trillion<\/a> on data centers over the next decade \u2014 will only further fuel fears that even the industry\u2019s top players are still far from being profitable.<\/p>\n According to Reuters, state-backed investors sold into market rallies, or periods of rapid gains, to keep those gains in check, as part of a push by the government to dampen volatility. However intentioned that tactic may have been, it couldn\u2019t dress up the fact that the demand for AI products just isn\u2019t there yet.<\/p>\n