China’s cloud computing market loses steam in first quarter, but generative AI demand offers a silver lining
- Spending on cloud infrastructure services in China rose 6 per cent in the three months to March, the third consecutive quarter of single-digit growth
- The end of remote work arrangements reduced demand for cloud services, but demand is rising for a variety of new ChatGPT-like AI services
Spending on cloud infrastructure services saw its third consecutive quarter of single-digit growth, reaching US$7.7 billion in the first three months of the year, according to a report from research firm Canalys on Thursday. China accounted for 12 per cent of the global market, down from 13 per cent a year earlier.
The lacklustre results for an industry that has been a star performer in recent years comes after the country lifted its strict Covid-19 control measures that many hoped would help lift the economy. But it also meant lower demand for online meetings and remote work tools, according to Canalys. Businesses are more cautious with tech spending and investment, as well, amid a weak macro-environment.
Demand for generative AI and the models that power it, on the other hand, is expanding following the explosion of interest in OpenAI’s ChatGPT. The technology is expected to drive new growth opportunities in the cloud computing market, Canalys said in the report.
China now has the second-most computing power in the world at 180 exaflops, a measure of performance based on computations per second, Liu Yulin, an official at China’s Ministry of Industry and Information Technology, said at a conference in Shanghai on Wednesday. The country also has more than 20 million servers, with over 1,000 exabytes of storage capacity, according to Liu.