In the eyes of Yin Qi, co-founder and CEO of Megvii, a Chinese artificial intelligence unicorn, the AI industry is in the stage of "trough of disillusionment".

The term is part of a well-recognized graphical presentation created by the market research company Gartner Inc to represent the maturity, adoption and social application of specific technologies. Trough of disillusionment is where interest in the technology wanes as experiments and implementations fail to deliver to the hype it has created.

"After going through rapid development for the past five to six years, the AI industry is sliding into a deep-water zone. Entrepreneurs, investors and media are all lowering their previously high anticipation toward AI," said Yin, who co-founded the computer vision technology provider nine years ago.

Such views are echoed by many in the AI industry. Duane Kuang,founding managing partner of Qiming Venture Partners, said several years ago that every investor was enthusiastic toward AI. As long as startups came with the label "AI", they were given a high valuation.

"Now, there are more and more AI companies. Although no one doubts the value of AI, everyone is beginning to ponder the true value of AI companies," Kuang said.

This stage is a must for a technology to mature. Producers of the technology either shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters, Gartner said.

"The trough of disillusionment for AI could last 18 to 24 months," Yin said, adding that only companies that can apply AI to solve industrial problems at scale can survive the stage and emerge stronger.

According to the 32-year-old senior executive, currently, many problems are blocking AI to truly deliver its value, including insufficient supply of computer algorithms, and the difficulty and high cost in applying algorithms to different industries at scale.

As AI is increasingly used in supermarkets, smartphones and other scenarios, some believed that AI algorithms have become very easy now, but the fact is that the supply is far from enough, Yin said.

"Compared to the demands of application scenarios for AI algorithms, the supply is less than 1 percent," Yin said. That is especially the case when it comes to facial recognition technology's application industries such as transportation and finance, which have stringent demands for precision, security and safety.

To solve these problems, Megvii has established the world's largest computer vision research institute, which houses more than 500 full-time researchers to focus on bettering its algorithms. The company has also developed its proprietary deep learning framework, MegEngine, and its AI productivity platform Brain ++, which can enable algorithm training at scale.

The company announced in March that it would open source MegEngine, making the platform accessible to developers across the globe.

To accelerate the industrial application of AI, Megvii has also focused its resources to offer full-stack AI solutions across three verticals: personal internet of things, city IoT and supply chain IoT.

With its technology being widely used in smartphones, retail and city management, Megvii upgraded its strategy to include supply chain management last year to help drive forward digital transformation. It unveiled a system called "Hetu" to boost efficiency in the logistics sector in January 2019.

Amid the COVID-19 outbreak, its AI-enabled temperature-screening solutions have been widely deployed in subway stations, universities, shopping malls and other places across China to help contain the epidemic.

Megvii is among the eight Chinese tech firms added to the US Entity List in October 2019.

Yin said the US move has limited impact on its business. "Most of our core technologies are indigenous. The US restrictions have forced us to replace some supplies of components, but the impact is short-term."

When asked about Megvii's IPO postponement, Yin remarked that the firm is continuing its steady push for its listing and is awaiting the right timing.

Megvii keeps its business healthy and maintains an adequate cash flow, he said, noting that the firm not only wants to go public but hopes for a stable performance after the Hong Kong listing.

The firm filed for an IPO in the Hong Kong market in August 2019.