20171215-中国银河国际证券-The_new_AI_Industry_Development_Plan_2018-2020_will_attract_market_attention_on_AI_related_names._5页_498kb

AI Industry Development Plan 2018-2020 Summary

Core Content

The Chinese government has released the AI Industry Development Plan 2018-2020, aiming to position artificial intelligence (AI) as a core driver of technological and industrial innovation. This plan outlines a three-year roadmap for advancing AI technologies and their integration into various sectors, emphasizing the development of key components, algorithms, and applications to achieve global competitiveness by 2020.

Main Objectives

The plan focuses on eight major application areas and three key development components:

1. Application Areas

• Intelligent Connected Vehicles: Develop AI computing platforms, autonomous driving systems, and vehicle intelligence algorithms. By 2020, a smart-car networking platform will be established to support highly autonomous driving (HA level).
• Intelligent Service Robots: Enhance interaction, operation, and collaboration capabilities. By 2020, mass production and application of home and public service robots will be achieved, with over 20 application demonstrations.
• Smart Drones: Focus on intelligent obstacle avoidance, automatic cruise, and autonomous flight. By 2020, drones will achieve high precision and omnidirectional perception.
• Medical Imaging Diagnosis System: Standardize data collection and accelerate the commercialization of AI-assisted diagnosis systems. By 2020, the system will detect over 95% of typical diseases with less than 1% false negatives.
• Video Image Identification System: Improve facial recognition accuracy in complex dynamic scenes to exceed 97% detection and 90% correct recognition.
• Intelligent Voice Interactive System: Achieve 96% speech recognition accuracy under multi-scenarios and 92% recognition at 5 meters distance.
• Intelligent Translation System: Enhance multilingual translation accuracy, aiming for over 85% in Chinese-English and significant improvements in ethnic minority language translations.
• Smart Home Products: Expand the range of smart home products, increase smart TV penetration to over 90%, and improve the intelligence and safety of home appliances.

2. Key Development Components

• Smart Sensors: Support R&D in miniaturization, precision manufacturing, and new materials. By 2020, sensors like piezoelectric, magnetic, and acoustic will be mass-produced with improved performance.
• Neural Network ICs: Develop high-performance cloud and terminal neural network chips. By 2020, cloud chips will reach 128TFLOPS performance and 1TFLOPS/w energy efficiency.
• Open Source Platforms: Build cloud-based training and terminal development frameworks, algorithm libraries, and open source communities. By 2020, open source platforms will support large-scale distributed clusters and lightweight modular frameworks.

3. Intelligent Manufacturing

• Key Equipment and Technology: Improve the intelligence level of high-end CNC machine tools, industrial robots, and logistics equipment. By 2020, the forming efficiency of additive manufacturing equipment will exceed 450 cm³/h.
• New Smart Manufacturing Model: Encourage the use of AI and machine learning for production optimization, quality control, and flexible manufacturing. By 2020, operating costs will be reduced by 20%, and defective product rates will drop by 10%.

Key Industries and Companies

The plan highlights the importance of TMT platforms and vertical AI companies:

• TMT Platforms: Tencent (700.HK), Alibaba (BABA.US), Baidu (BIDU.US)
• Vertical AI Companies: Kingsoft (3888.HK), ZhangAn (6060.HK), Meitu (1357.HK), Yixing (2858.HK), Kingdee (0268.HK), Sinosoft (1297.HK)

On the hardware side, companies involved in ADAS, IC design and foundries, and communication equipment are also emphasized:

• ADAS-Related Names: TUS (872.HK), Nexteer (1316.HK), Sunny Optical (2382.HK), O-Net (0877.HK)
• IC Design and Foundries: SMIC (0981.HK), Hua Hong (1347.HK)
• Communication Equipment: ZTE (0763.HK), YFOC (6869.HK)

Market Impact

The plan is expected to attract significant market attention to AI-related stocks, despite recent weak market sentiment. It is anticipated that the Chinese AI industry will experience rapid growth and technological breakthroughs, creating opportunities for both horizontal and vertical AI players.

Investment Outlook

The report suggests that AI is a major trend, and many industries are actively adopting AI strategies. The focus is on cultivating AI innovative products and services, promoting AI industrialization, and enhancing the intelligent application of products in various sectors.

Equity Ratings

• BUY: Share price will increase by >20% within 12 months
• SELL: Share price will decrease by >20% within 12 months
• HOLD: No clear catalyst; downgraded from BUY pending clearer signals

Disclaimer and Interests

• The report is not intended for distribution in jurisdictions where it may be illegal.
• China Galaxy International may have financial interests in the companies mentioned.
• Analysts are certified and have no conflicts of interest in the securities discussed.

Conclusion

The AI Industry Development Plan 2018-2020 is a comprehensive initiative to drive AI innovation and integration into the real economy. It outlines clear targets for technological advancement and market application, with a strong emphasis on local development and global competitiveness. The plan is expected to create a favorable environment for AI investment and growth in China.