China's primary artificial intelligence technology firm, iFlytek, expects a first-half loss of up to $65 million due to significant investments made under "ultimate" Washington pressure.
For the first six months of the year, the business predicted a net loss of 380 million to 460 million yuan ($53.31 million to $64.53 million), compared to a net profit of 73.57 million last year.
After the disclosure, iFlytek shares plunged roughly 7% Monday morning. According to a report from Nikkei Asia, the company lost money due to increased spending, including 650 million yuan for Spark V4.0 AI language model research.
The US began penalizing iFlytek for alleged human rights abuses against minory Muslim groups in Xinjiang in October 2019. Despite these hurdles, the business highlighted its AGI advances and engagement with Chinese partners in education, medicine, and automotive.
Massive Losses Recorded
The corporation reported receiving over 1.3 billion yuan in governmental subsidies over the last three years. A 140 million yuan drop in investment income, 120 million in other revenue, and 100 million in credit impairment provisions also contributed to the loss.
Kyna Wong, a Citi analyst who rates iFlytek a buy, said earnings fears pushed the share price down. The target price is 54.3 yuan, over 40% above Monday's lunchtime closing, although US-China tensions and AI competition are threats.
Meanwhile, Chinese AI startups seeking globalization are flocking to Singapore due to US trade penalties that slow down the development of China's newest technology.
Having a presence in Singapore aids these enterprises in distancing themselves from their Chinese heritage, a tactic known as "Singapore-washing." This technique intends to limit customer and regulatory scrutiny in anti-China nations like the US. Even so, US regulations and criticism have plagued Singapore-based enterprises such as ByteDance and Shein.
The logo of iFLYTEK is seen during the World Artificial Intelligence Conference (WAIC) in Shanghai on July 6, 2023. WANG ZHAO/AFP via Getty Images
China Still Showcasing Tech Dominance Despite Restrictions from The West
AI startups risk more than perception. These businesses train their algorithms with massive datasets and powerful hardware. US prohibitions on advanced processors and technology to prevent military use affect the quality of AI products. China, too, has limited access to OpenAI's software.
To comply with AI-generated content laws, companies must register their algorithms with China which limits AI development and exploration. One expert estimated that 70% to 80% of Chinese software and AI businesses seek worldwide markets, sometimes skipping China, per a report published by Yahoo! Finance.
Singapore has liberal regulations, making business start-ups easy. Chan Ih-Ming, executive vice president of the Singapore Economic Development Board, says its strategic position and robust multinational company network offer it a gateway to Southeast Asia and worldwide markets. By 2023, Singapore will have over 1,100 AI firms, with more Chinese AI businesses moving in.
Amid the challenges, China's AI business showed sophisticated goods at the recent World AI Conference in Shanghai, with the UN naming it top AI software patent filer.
The conference exhibitors displayed realistic watercolors and sci-fi artworks made using generative AI. Humanoid robots from almost a dozen Chinese companies performed for guests, per a report from Manila Standard.
Startup incubator staffer Ethan Duan was optimistic about China's tech talent. Duan expects China's AI industry to expand despite Western constraints. According to the Paulson Institute think tank MacroPolo, China's proportion of leading AI researchers rose from 29% in 2019 to 47% in 2022.
After Huawei released a new PC using an Intel AI-capable CPU, the US authorities withdrew export permits for specific components. Critics speculate that China might use its AI for spying.
