Why China’s Tencent is seeing a surge in profits and revenue?

CGTN Europe

CGTN Europe interviewed Rob Kniaz, Founding Partner, H Tree Capital

Transcript

00:00The Chinese tech giant Tencent has reported a 90% increase in profits in the year

00:062024 as China goes all-out to generate growth from innovation

00:12Total revenue rose 11% year-on-year. Thanks to an increase in gaming and advertising incomes

00:20Tencent's profits were also boosted by artificial intelligence

00:24It's released two new models recently

00:27when you on 3d 2.0 can turn text or images into 3d graphics and

00:33Turbo S is designed to answer user queries as quickly as possible

00:38But expansion into AI came with a sharp increase in spending

00:43Tencent spent over ten point six billion dollars last year more than triple what it spent in

00:482023 the tech giant says servers and chips were the big expenses

00:53Rob Niaz is from the tech a venture capital firm Hoxton ventures that good to see you back on the program Rob

00:59Thank you for joining us

01:00So why has a Tencent done so well? I?

01:04Think they're riding the same wave of AI that pretty much every big tech company is riding right now

01:09They're a bit later to the curve and I think the AI wave hasn't really hit China until the past few months

01:15But they're right in the middle of the storm right now where the customers are pouring in

01:20So artificial intelligence clearly a factor in Tencent success not just the Tencent though

01:27How important is AI in the success of Chinese tech companies more broadly? I?

01:33Think it's a global question that AI is gonna affect

01:36You know every business around the world in different ways and it's sort of a wave of adoption right now as companies as countries have

01:41You know the money and resource to start adopting it China was probably a bit late in that regard

01:46But now they're catching up and they're in the thick of it where you're seeing companies being applied

01:52companies starting up every day and

01:54Of course, you know when you're in a land grab

01:57They benefit goes to the guy selling the picks and shuffles, which are the Tencent some of those with the cloud products

02:02What about supply though?

02:04We know that demand for the kind of products that Tencent makes is there but are there still questions about Tencent and other companies?

02:12Meeting that increasing demand

02:15Yeah, it comes down to the GPU the

02:19Central processing unit that's used for AI and that's a zero-sum game where I was manufacturers and I won

02:24They're pushing out as many chips if they can they're subject to export controls where they can't necessarily put specs chips

02:31on the market in China

02:33the China's gonna coming from and

02:35Place it would be an underdog and having access to the right materials

02:40There are some I think the Chinese are clever and we'll find ways around it like you saw with deep-seek

02:45They're able to do it with lower power and chips and write more efficient software

02:48That's insane. So I think the the pool is there and the market will find a way

02:53Well, I want to do a bit of a preview of something

02:55We're going to talk a bit more about in the program a moment, which is Nvidia

02:58They have of course been at the forefront of the kind of technology used in AI. They're now going to launch

03:04New kinds of chips. What does that mean for Chinese companies and companies like deep-seek?

03:11Yeah, I think what Nvidia is doing is segmenting their market so they can target what customers specifically need

03:17So if you think about a regular graphics card, there's a lot of features in that that a machine learning expert doesn't really need

03:23So we need to give things like the onboard RAM of the card

03:26I think they're gonna do a lot more segmentation to try and find ways of meeting the customer needs it in a more

03:32Targeted way we saw this with the chips the deep-seek use. They were sort of

03:36Neuter of neutralized chips versus the ones sold in the US, but they were still quite powerful

03:41There were certain things that were disabled in them, but they were able to work around them to get the result

03:46They needed so I think it's more of that where you're you're taking the

03:50Taking the animal and carving up all the pieces and trying to make dinner with

03:54every bit you can

03:56Well great to talk to you again. Thanks for coming back on the program. That's Rob Niaz from venture capital firm Hoxton ventures

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