Page 40 - Bloomberg Businessweek-October 29, 2018

◼ SOLUTIONS Bloomberg Businessweek October 29, 2018

Semiconductors are at the epicenter of the trade dis- The other is for Alibaba’s massive internal servers.
pute. Today, China imports almost three times as many Both efforts could be bad news for U.S. companies
chips as it produces domestically, according to research Nvidia Corp., the biggest chip beneficiary of the AI com-
firm Gavekal Dragonomics. The firm estimates that China’s puting boom, and Intel Corp., the server king. (An Alibaba
spending on semiconductor equipment from 2017 to 2020 spokeswoman says its relationships with Nvidia and Intel
will surpass $60 billion, trailing only Korea’s. That’s part of “remain unchanged.” Intel and Nvidia declined to comment.)
Beijing’s big push to reach what analysts call “semiconduc- Threatening U.S. dominance in the industry is immensely
tor sovereignty.” difficult. Alibaba and other cloud computing providers that
“The trade war is strengthening China’s determina- bring building and design in-house have yet to make a dent
tion to have their own supply chain,” Li says. A recent in the $134 billion-a-year market for computing chips.
Bernstein report cataloged 13 Chinese companies work- Alibaba’s semiconductors will first support what’s
ing on chips tailored for AI software algorithms, including called “inference”—when computer scientists have
Baidu Inc. and Huawei Technologies Co., China’s semi- already baked the data they have (i.e., millions of voice
conductor leader. More than half the companies on the interactions) into algorithms and want to deploy a ser-
list were formed in the past three years. But none has as vice (a voice recognition app). But researchers pine for
much reach as Alibaba. The country’s largest company is chips that turn raw data into workable AI algorithms,
so structurally important to the economy that some see what’s called “training.” Alibaba has started building
the invisible hand of the authorities behind its move into those, a spokeswoman says.
chips. “They are under pressure, to some degree, from While Alibaba dominates China’s cloud market, it’s fac-
the government,” Li says. ing increasing competition from rivals such as Huawei
An Alibaba spokeswoman says the company first and Tencent. Adding chips could help. And its cloud busi-
considered a move into chips before China’s industrial ness benefits from the expansive reach of the parent com-
policy went into effect in 2015. Alibaba makes money pany, says Colin Chan, vice president of software company
mostly from e-commerce, but it’s trying to diversify. It Rackspace. Chan recently brought an executive from an
has invested in at least six semiconductor companies, unnamed hospitality company in China to assess Alibaba’s
acquiring the first, C-Sky Microsystems Co., in April. cloud products. He and the executive met in a hotel. Alibaba 45
Announced in September, the new Pingtou Ge sub- operated the voice-controlled TVs and speakers in each
sidiary, named after the Chinese internet moniker for room and even owned the hotel. “It’s not just the basic plat-
a honey badger, has more than 300 people on its sili- form. They come with a package,” Chan says. “And that’s
con teams, according to a person familiar with the com- an attraction.” ——Mark Bergen, with Ian King
pany. They will work on two types of AI chips. One will be
embedded inside internet-of-things devices, so objects
such as smart speakers and Shanghai metro kiosks will THE BOTTOM LINE China’s trade war with the U.S. is prompting more
Chinese companies to make their own chips. Alibaba’s new subsidiary will
be able to detect and decipher speech, then talk back. design chips to help support the company’s cloud and AI businesses.

Tracking Mosquitoes key to assessing and
Harnessing data is

In Puerto Rico controlling a disease-
carrying pest

There are more than 30 species of mosquitoes in Puerto September 2017, scientists worried the A. aegypti pop-
Rico. Most are considered nuisances, not health threats. ulation could soar because of breeding sites created by
But one, the Aedes aegypti, spreads chikungunya, den- storm debris and residents storing buckets of water to
gue, Zika, and other viral diseases. Zika, after hav- flush toilets during blackouts.
ing been first reported in Puerto Rico in 2015, infected To assess the threat, researchers are counting how
more than 35,000 people across the island the following many females—the sex that bites—are caught in more
year. When Hurricane Maria devastated Puerto Rico in than 1,300 traps across the island. The initiative, which