In China, companies are shipping AI hardware

Hi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a succinct snapshot of what I’m seeing and hearing from local businesses.

In Hangzhou, startups are taking on both software and hardware as they build devices to run AI. How does this change the AI tech race?

As Chinese cloud companies rushed to promote OpenClaw in early March, one startup in Hangzhou was already building devices.

EinClaw shipped its first 100 units — of a $43 clip-on mic that lets users send voice commands to an OpenClaw AI agent — on Friday. Just two people developed and assembled the device, from parts sourced across China, co-founder Arvin Chen told me when I visited a WeWork-style office in Hangzhou last week.

OpenClaw functions are also coming to robots. In nearby Suzhou, startup JoyIn claims its Zeroth M1 humanoid is the first to do so. Using Tencent Cloud tools, people can send commands to the robot and control it remotely, the start-up said. Pre-orders are expected to begin by July.

Together, these point to a shift across industries — from internet-only AI and into hardware.

“Cloud-native is a little bit outdated. The technology is useful, but the business model is a little outdated,” Ray Von, founder, CEO and chairman of Tencent-backed OpenPie, told me last week. “Data sovereignty right now is a concern.”

That’s a big deal, coming from a startup founded to build cloud data systems.

China’s millions of factories illustrate the limits of cloud-only AI. While they’re interested in unlocking AI efficiencies, Von said manufacturers are worried about sending proprietary information to the cloud. So, he said, OpenPie is building devices that enable AI tools to be run locally using low-cost Chinese chips.

The goal is to ship 10,000 of these boxes by the end of this year at 100,000 yuan ($14,627) each, before scaling up, Von said.

Expansion into the physical world is also transforming software-first companies such as Style3D, which got its start in 2015 using AI to help clothing companies speed up the design-to-production process.

So many companies asked Style3D for its data on physical materials and textures that the company decided to enter the business itself — launching robotics platform SynReal last fall, CEO Eric Liu told me Thursday, on the sidelines of a Hangzhou venture capital association conference. He says that to function well in the real world, humanoid robots will need an array of specialized information on textures, to grasp items from oranges to silk scarves — data his company can provide.

Startups aren’t the only ones chasing the hardware trend. Electric car companies, including German automaker Volkswagen, last week announced they are rolling out on-vehicle AI tools to respond to driver voice commands.