In 2024, a remarkable surge is expected in the field of edge AI, with industry experts widely proclaiming this year as the dawn of the "Edge AI Era." Research presented by scientists at Meta AI suggests that the edge AI market is projected to balloon to an astounding $143.6 billion within the next eight years, with a tenfold increase over the decadeThis emerging paradigm is revolutionizing how artificial intelligence can be utilized directly on devices—ranging from smartphones to wearable gadgets—rather than relying solely on remote servers.

But what exactly is edge AI? The term describes the implementation of lightweight AI models on terminal devices, enabling smooth functionality that integrates naturally into daily lifeSince the beginning of this year, various edge AI products have infiltrated every corner of consumer technology, from AI-equipped smartphones and computers to even smart glasses and wearable tech

This has led to a pivotal transformation within the tech industry, primarily driven by the growing relevance of edge AI.

China has a significant advantage in the hardware manufacturing element crucial to edge AIIn the competitive smartphone market, for instance, eight out of the top ten global brands hail from China, with a considerable number of these brands headquartered in ShenzhenThe city has emerged as a unique powerhouse, showcasing an exceptional capability to produce advanced hardware that supports the new AI wave.

Shenzhen, often dubbed the capital of entrepreneurship where one in every ten residents is a business owner, is witnessing an influx of success stories regarding AI hardware venturing into foreign marketsThe city's electronic products are gaining traction across the globe, riding on the wave of AI advancements.

The trend of exporting AI hardware has become uncontested

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Innovators are recognizing two distinct starting points for their ventures: 'AI + Hardware' and 'Hardware + AI.' The former focuses on harnessing AI's capabilities through a hardware platform, extending the reach of large AI models into real-world applicationsThe latter seeks to upgrade existing hardware using smarter, AI-driven algorithms, enhancing their capability.

However, regardless of their starting point, entrepreneurs find that international markets offer better profitabilityIn an interview, a business owner mentioned that overseas consumers tend to have higher purchasing power, allowing companies to set prices significantly above those in the domestic marketFor example, the price range for digital products abroad typically falls between $99 and $199, contrasting sharply with the usual domestic price range of 100 to 300 yuan.

The software arena also trends towards developed markets, while less mature in China

Companies are leveraging the established user payment habits in the U.Sand Europe to experiment with subscription models, which allows them to diversify their revenue streamsNotably, hardware companies can negotiate revenue sharing agreements directly linked to AI applications, something that appears more challenging in China due to a lack of similar consumer habits.

Thus, the landscape is changingMany entrepreneurs now prioritize designs that cater to ergonomics and user behavior in Western markets, often opting to integrate with AI models developed abroadMoreover, domestic startups are increasingly turning to international crowdfunding platforms to gain initial funding rather than seeking capital from domestic venture capital circles before expanding overseas.

As economic pressures grow, many domestic AI hardware teams are focusing their initial offerings on foreign shores, intending to establish themselves before gradually branching back to domestic markets.

The export of AI hardware is emerging as a new engine within Shenzhen's trade landscape

Recent data indicates that Shenzhen produces one-seventh of the world's smartphones, one-eighth of its new energy vehicles, and 70% of consumer dronesThe city's impressive statistics reflect a robust industrial foundation ready to support the AI hardware revolution.

In the thriving Nanshan district—known as the hotbed of AI startups—one noteworthy company, Smart Connectivity Technology, launched an AI-enhanced card recorder equipped with ChatGPT technology in mid-2023. Despite being a fledgling team with fewer than 70 employees, they successfully sold over 300,000 units within a year, generating nearly $50 million in revenue.

This startup comprises many professionals from esteemed companies such as Sogou, DJI, Anker, and Insta360, shedding light on the caliber of talent driving these innovationsAs more AI hardware startups congregate in areas boasting notable titans of the tech industry—like DJI and Anker—they share insights and drive collaboration, effectively pushing the industry forward.

The smartphone sector, a critical pillar of Shenzhen's economic prowess, has not been left behind

The latter half of 2023 marked a surge in AI-enabled devices, correlating with Shenzhen's increased smartphone exports, reported to be 118 million units in the first eight months of the year, which is a remarkable 46.6% increase year-on-yearNotably, this growth is accompanied by rising average selling prices; in August, for instance, the average export price rose by 16.5%, resulting in a 51.8% surge in overall export value for the month.

This flourishing trend of AI hardware exports augurs well for Shenzhen’s status as “China’s number one foreign trade city.” The city is poised to remain a leader, with new AI hardware products continuously emerging and setting new benchmarks in past categories.

In a bid to sustain the growth trajectory of the AI sector, Shenzhen recently introduced a series of significant policies aimed at reinforcing its role as a pioneer city for artificial intelligence

On December 18, the city’s Industrial and Information Bureau unveiled initiatives that included offering substantial AI-related subsidies, such as distributing up to 500 million yuan in "training vouchers," 50 million yuan in "corpus vouchers," and 100 million yuan in "model vouchers" annually to bolster local AI development.

These incentives specifically promote the development of intelligent hardware products—such as AI computers, AI smartphones, smart wearable devices, AI virtual reality equipment, and household smart products—integrating AI models into everyday useCompanies reaching a certain sales threshold for these annual bestsellers may receive rewards totaling up to 3 million yuan.

However, some founders in the AI headphone industry have raised concerns regarding the actual effectiveness of these vouchers, arguing that, given the competitive startup atmosphere in Shenzhen, the average subsidy might end up being quite limited

For instance, spreading the 500 million yuan for training vouchers across the 1,646 AI-related enterprises in Shenzhen means that each would approximately receive only 300,000 yuanThis is barely enough to cover the training costs for a startup generating 20 million yuan in revenue, which could easily exceed 800,000 yuan annually.

Critically, the current use of “training vouchers” and “model vouchers” remains confined within domestic parametersFor example, training vouchers can only be utilized through specific partnerships with eleven official entities including China Mobile and Huawei CloudSimilarly, model vouchers are restricted only to AI models that have been pre-approved by national authorities.

For many startups targeting the U.Sand European markets, this presents a significant challengeHardware products developed in collaboration with international institutions or based on foreign AI models are ineligible for these subsidies

As a result, there is fervent hope among entrepreneurs for an expansion of supportive policies focused on AI hardware exports.

Shenzhen's bold rollout of “AI vouchers” clearly demonstrates its aspiration to be at the forefront of AI advancementHowever, the hurdles—limited subsidies and restricted usability—must be tackled to unlock the full potential of this initiativeKey stakeholders in Shenzhen understand the vital role of smart terminals in the city's wider industrial trajectoryAccording to an insider in the Shenzhen industrial landscape, intelligent terminals are the city’s secret weapon for future growth in the AI sector.

Moreover, with the emergence of the domestic Harmony operating system and aspirations for a more interconnected world, Shenzhen is strategizing to enhance international collaboration and refine subsidy mechanismsThis will enable its local AI industry to reap better benefits from these policy measures, ensuring it remains a competitive player on the global stage