(Yicai) June 3 -- Multiple companies have entered the computing power market recently amid a new round of artificial intelligence infrastructure construction, signing deals worth tens of billions of yuan (billions of US dollars).

Hec Technology Holding, a Chinese electronic and new materials supplier, said its new unit Hec Cloud Intelligence Computing Technology has signed a five-year AI computing services deal with a corporate client worth up to CNY12 billion (USD1.8 billion) on June 1, less than a month after signing its maiden agreement with a different corporate client worth a maximum of CNY19 billion.

On May 25, Shenzhen-based Maxvision Technology announced its subsidiary had landed a computing power services order worth around CNY6 billion.

Hec Tech and Maxvision have made huge investments to enter the computing power market. Hec Cloud was set up on April 15, with the parent company saying it plans to provide the unit with a guaranteed amount of no more than CNY60 billion this year, accounting for 648 percent of its latest net assets.

In April, Maxvision announced it plans to spend up to CNY1.1 billion

to buy information technology equipment and components from multiple suppliers, before increasing the investment to CNY6 billion to fully promote the computing power business.

Maxvision logged a net profit of CNY85.3 million (USD12.6 million) on revenue of CNY1.4 billion last year, with CNY1.3 billion cash on hand as of March 31, according to its annual financial report.

Despite the shortage of computing power, the cross-industry players do not have much of a say in front of major clients. For example, Hec Cloud's computing power services need to go through delivery, inspection, and acceptance by the client in its first deal before the contract is executed and charged.

If the services fail to be qualified upon the inspection or do not meet standards even after rectification, the client can unilaterally terminate the agreement without bearing any liability for breach of contract. However, if Hec Cloud breaches the contract, the client can demand a penalty.

In addition, Maxvision said it has been in the computing power service business for a short period and lacks experience in operating large projects, so if it cannot fully meet its clients' core demands, this may have a certain impact on the amount it receives from the contract.

Hec Tech and Maxvision both emphasized that the computing power deals "do not constitute any performance commitments or profit forecasts." In fact, entering the market may bring high cash flow pressure and losses, they stressed.

Editor: Martin Kadiev