By Mary Hong
April 25, 2023 Updated:
April 25, 2023
A robotic shark is seen at the Apsara Conference, a cloud computing and artificial intelligence (AI) conference, in Hangzhou, in China's eastern Zhejiang Province, on Oct. 19, 2021. (STR/AFP/Getty Images）
News Analysis
China’s leading
artificial intelligence (AI) firms have had a stressful year in 2022. Some
reported heavy losses due to the COVID-19 pandemic, the chip ban, and the U.S.
sanctions over their role in human rights abuses in Xinjiang.
iFlytek
Voice Recognition
On April 20, iFlytek, China’s voice-computer
champion, reported a revenue of 18.82 billion yuan ($2.73 billion), a
year-on-year decrease of 63 percent, for 2022 net profit.
The loss was caused by
U.S. sanctions in 2019 and 2022, which affected the company’s operations,
from its supply chain to getting contracts, according to the company’s report.
In 2019, iFlytek and seven other companies were
placed on a U.S. trade blacklist over their role in assisting Beijing’s
surveillance and human rights abuses in China’s Xinjiang region.
In 2022, the company was again placed on the U.S.
entity list, restricting it from acquiring critical technologies used in
supercomputing and guided weapons, among other things.
Chinese
AI Tigers
China’s four leading
computing startups—SenseTime, Megevii, CloudWalk, and Yitu Technology—are
recognized as the “four AI tigers.”
All four companies are on
the U.S. trade blacklist.
SenseTime and CloudWalk
recently released their reports, showing losses for 2022.
SenseTime reported an operating income of
3.8 billion yuan (about $550 million) for 2022, a year-on-year decrease of 19
percent; the annual loss was 6.09 billion yuan (about $880 million), and a
cumulative loss of 43.8 billion yuan (about $6.35 billion) since 2018.
According to various
Chinese media reports, SenseTime’s core business in the “smart city” was down
50 percent year-on-year, mainly due to the impact of the pandemic.
“Smart city” refers to SenseTime’s security and
surveillance products employed in cities’ infrastructures.
SenseTime developed
technology in facial recognition and its application in video analysis,
autonomous driving, and remote sensing.
The company has been on
the U.S. trade entity list for allegedly using its technology to assist the
Chinese Communist Party’s (CCP) surveillance of Uyghurs.
CloudWalk was the world’s
largest facial recognition device maker, according to a 2018 report from Gen Market Insights.
The company’s 2022
performance forecast reported a net profit attributable to the
parent company of -785 million yuan to -934 million yuan (about -$113.87
million to -$135.49 million). The loss has increased from 24.18 percent to
47.75 percent year-on-year.
CloudWalk is on the U.S. Defense Department’s list of
companies serving Chinese military research and development (R&D) as part
of the CCP’s so-called military-civil fusion strategy.
The company’s
re-identification (ReID) technology—which can track people by
clothing, hairstyle, and posture—supplements facial recognition for public
surveillance.
CloudWalk’s cross-mirror
tracking ReID technology has reportedly assisted the Chinese authorities in
arresting more than 10,000 people from 2016 to 2019. In particular, the
technology has allegedly become a persecution tool widely distributed
throughout China to target specific ethnic and religious groups.
Chinese
Chip Crisis
Cambricon, China’s leading AI chip startup,
reported its operating income of 729 million yuan (about $105 million) in 2022,
a year-on-year increase of 1.11 percent; the net profit attributable to the
parent company is -1.1 billion yuan (about -$160 million), a 41.40 percent
higher loss compared to the same period in 2021.
The company said the
significant loss was due to increased R&D expenses, asset impairment
losses, and credit impairment losses.
It has not yet made a
profit, mainly because its complex computing chips require continuous and
significant R&D investment.
Cambricon was listed on
the U.S. trade blacklist in December last
year.
On Dec. 16, 2022, the
U.S. government added 21 Chinese AI chip entities to its trade blacklist and blocked their access
to technology made anywhere in the world with U.S. equipment.
Li Bing contributed to this report.
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