(Yicai) March 3 -- China is entering a new development cycle for artificial intelligence after a number of the country’s tech giants, including Alibaba Group Holding and Baidu, laid out their plans for major investment in the sector, according to experts.

“Similar to the previous development round for fifth-generation communication network infrastructure, this AI infrastructure build-up cycle will serve as the technological foundation to boost overall societal productivity, drive economic growth, and have a long-term impact,” said Wang Zhi, partner at Shanghai-based investment firm Weihao Inno-Chip.

On Feb. 24, Alibaba said it plans to spend CNY380 billion (USD52 billion) on AI and cloud infrastructure over the next three years, a record for a private Chinese firm. The day before, Baidu had announced that as part of a deal to buy YY Live, about USD1.6 billion held in escrow was released, which it plans to invest in AI and the cloud.

China Mobile, one of the country's three major telecom operators, has set up AI intelligent computing centers across Chinese provinces and cities, while peer China Telecom has built a large-scale smart computing center in the Lingang Special Area of Shanghai's free trade zone that can hold 300,000 AI chips.

Despite the longer-than-expected period for returns on AI investments, investors are optimistic about the potential returns and the vasts opportunities, according to Zhang Yi, a cloud computing analyst at Canalys.

“Rather than worrying about whether investments might not yield immediate returns, big firms are more concerned about missing out on future markets if they don’t invest today,” Zhang said.

Early planning is needed, Zhang noted, as once AI is fully rolled out, demand for AI computing power will grow exponentially. In addition, as Alibaba Cloud and other cloud providers expand overseas, they need to boost spending on cloud and AI infrastructure to support global data center expansion and quicken the pace of international market capture, Zhang said.

However, firms must stay alert to the potential risk of an overheating market, according to a source at cloud services provider UCloud Technology. The industry needs to remain vigilant about redundant construction, carefully match computing power supply and demand, and assess the actual progress in tech autonomy and control, he noted.

Shanghai-based UCloud has expanded its major intelligent computing centers in its home city and in China’s Inner Mongolia Autonomous Region, the person pointed out.

China's smart computing power will likely surge 43 percent to 1037.3 EFLOPS this year from last year, while the market growing 36 percent to USD25.9 billion, according to a joint report by International Data Corporation and Inspur Group.

Editor: Martin Kadiev