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Countries That Lead The Way In AI Investment & Innovation — The United States and China!

AI is not just for driverless cars, digital assistants, or movie recommendations anymore; in multiple industries, it’s a wave about to break. According to a recent McKinsey Global Institute studysurveying 3,000 “AI-aware” companies around the globe, only 20 percent are using AI-related technologies in a core part of the business, but the majority expect to ramp up AI spending in the next three years.

Other studies yield similar results. In an Infosys-funded survey of 1,600 business and IT leaders in seven countries, although only 25 percent said AI technologies were fully deployed and working within their organizations, 76 percent overall called AI critical to their companies’ success. Organizations with partially or fully deployed AI technologies expect them to contribute a 39 percent increase in revenue and a 37 percent reduction in costs by 2020. Businesses on average have been using AI for about two years and expect mature adoption in three more years.

Echoing insights from industry analysts and other observers, these reports conclude that AI in manufacturing is nearing a tipping point in the emerging factories of the future. There is consensus that AI applications ranging from smart and collaborative robotics to virtual assistants will upend how factories operate, requiring a complete rethinking of plant designs, manufacturing footprints, and supply chain models. So it’s not surprising that most AI tech investment has come from internal R&D dollars at big tech-savvy companies like Amazon, Baidu, and Google, according to the McKinsey study.

AI China 2020? Most external investment is aimed at machine learning — the enabling technology for much of AI tech, such as speech recognition and robotics, according to the McKinsey study. Most of those dollars are going to U.S.-based companies (66 percent), followed by Chinese companies (17 percent), and both countries have established AI technology ecosystems.

The Infosys survey also found that U.S. organizations are the most likely to have increased their investments in AI technologies during the past year, while Chinese executives are the most likely to consider AI fundamental to the success of their business strategy.

Although China is a distant second to the United States in receiving AI investment dollars, its investment and deployment are growing fast. “Our survey suggests that countries that lead the way in AI investment and innovation — the United States and China — also lead the way in AI adoption,” the McKinsey study states.

Both countries have made AI technologies central to their strategies for the manufacturing sector. Last year, the Obama White House released a strategic plan for AI R&D, and China made AI a key part of its Five-Year Plan for 2020. AI is likewise critical to the success of Made in China 2025, the country’s new initiative to shift its manufacturing base from low-labor-cost to high-value-add manufacturing. To meet MIC 2025’s aggressive timetable, however, China may have to pursue more merger and acquisition deals along the lines of Chinese home appliance maker Midea’s 2016 acquisition of German-based Kuka Robotics.

The Infosys survey reports that China heads the AI maturity score by country, probably because it has “fewer legacy systems and business processes to contend with, making AI adoption and integration easier to accomplish.” But that doesn’t mean China will catch up anytime soon to the United States, which has advantages beyond its nearly fourfold lead in external AI investment dollars. For one, most of the biggest tech companies investing their own internal R&D dollars are U.S.-based, according to the McKinsey study. And the majority of the largest industrial manufacturers doing their own internal development — such as ABB, Bosch, GE, IBM, Siemens, and Tesla — are headquartered in the United States or Europe, not in China. The United States has two major AI development hubs — Silicon Valley and New York — whereas China has only one, in Beijing, according to the McKinsey report. In electronics, multiple chip companies are developing or have announced GPUs or other processors that target AI; again, most of them are U.S.-based. When it comes to manufacturing itself, the renewed emphasis on Industry 4.0 advanced manufacturing is a strong indicator that the United States intends to reclaim at least some dominance on the factory floor. In turn, advanced manufacturing is one of the top four sectors in which the McKinsey study says AI will be adopted first, the others being financial services, retail, and health care.

Credit source: EETimes

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