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October 24, 2023
US-China ‘chip war’ impacts SenseTime’s diversification plans

SenseTime, a leading figure in China’s AI industry, faces significant challenges due to U.S. government export controls. These restrictions prevent companies like Nvidia from selling essential chips to Chinese entities, impacting SenseTime’s efforts to diversify its business model. The Hong Kong-based AI firm has been attempting to shift away from its primary surveillance business, which provides AI-powered security cameras to Chinese authorities. However, according to a recent report by The Financial Times, the ongoing U.S.-China “chip war” threatens to derail these plans.

SenseTime’s diversification efforts

In anticipation of its public listing two years ago, SenseTime’s Chief Xu Li highlighted the company’s future revenue potential from an expansive AI data center in Shanghai. This center, powered by Nvidia’s A100 GPUs, was designed to cater to AI companies. The move seemed then like a strategic decision, especially since SenseTime had secured GPUs before the U.S. imposed export restrictions.

However, as the U.S. tightens its grip on AI chip sales to China, SenseTime’s advantage in this sector is diminishing. The recent U.S. restrictions not only place SenseTime on its Entity List but also on an investment blacklist, causing foreign investors to withdraw their support.

Challenges ahead for SenseTime

Despite its efforts to secure its supply chain, SenseTime faces a decline in its traditional surveillance tech revenues. The company’s smart city sales, which encompass its surveillance technology, dropped by 58% in the first half of this year. While SenseTime remains optimistic about its long-term prospects, analysts are skeptical about its share price in the current climate.

The post US-China ‘chip war’ impacts SenseTime’s diversification plans appeared first on ReadWrite.

 

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