The Chinese AI bubble is deflating: over the past 600 days, 80 thousand AI startups have closed in the country

The correction in the American stock market, which was observed at the beginning of the month, made many investors wonder how effectively the field of artificial intelligence can return the money invested in it. Statistics from the Chinese startup segment show that nearly 80,000 young AI-related companies closed their doors in the previous 600 days.

Image source: Huawei Technologies

This data is provided by Commercial Times with reference to the Chinese publication TMTPost. To be more precise, after the release of the sensational ChatGPT chatbot at the end of November 2022 and until July 29 of this year inclusive, in China, out of 878,000 registered companies in one way or another related to the topic of artificial intelligence, 78,612 were closed. In fact, of the total number of AI startups registered in China during the specified period, approximately 8.9% closed.

According to experts, such a high outflow of companies from the Chinese artificial intelligence technology market is caused not only by the worsening economic situation, but also by the high entry threshold, since innovative activities in this area require enormous investments. Venture capital funding overall in China has declined over this time, so this is not just a problem for the AI ​​segment itself.

Over the past ten years, about 353,000 companies related to the topic of AI have left the market in China. Of these, approximately 200,000 have exited the market over the past three years. However, there is also a steady influx of participants in this segment. From the beginning of the year until August 7, 300,700 new organizations were registered in this area, and the total number of existing market participants in China reaches 1,804,300 companies. More than 4,500 organizations have reached industrial scale in their activities. They operate more than 180 large language models that are associated with the provision of public services, and the combined user base of these systems exceeds 564 million people. Participants in the Chinese AI industry are already calling on their compatriots to consolidate in order to spend money more wisely and achieve faster progress.