US Blacklists Chinese AI Organizations Including Leading Startups

The US government punished China for its “repression” of Muslim minorities by blacklisting Chinese AI organizations and security bureaus.

In rather sensitive timing just ahead of high-level trade discussions in Washington this week, the US took a hard line on allegedly brutal suppression of ethnic minorities in China by banning certain Chinese AI startups.

The trade ban includes 20 Chinese public security bureaus, eight companies, and AI startups SenseTime Group and Megvii Technology. It also included Hikvision, one of the largest global video surveillance firms.

The US singles out some of the best of Chinese AI

The blacklisting means the companies can no longer buy components from American companies without prior approval from the US government.

According to one view, the impact of the ban on Hikvision and Dahua would be “devastating.” Both video surveillance firms buy components from  Intel Corp, Nvidia Corp, Ambarella Inc, Western Digital, and Seagate Technology. Nearly 30% of Hikvision’s $7 billion revenues are from exports.

SenseTime, last valued at $4.5 billion is a global AI powerhouse and unicorn.  Meanwhile, Alibaba-backed Megvii has a valuation of $4 billion. A question mark now hangs over its proposed $1 billion IPO in Hong Kong.

[Related story: Chinese Artificial Intelligence Start-Up Megvii Filing for $ 1 Billion IPO]

“This will make people think twice about working with these companies even if there are no legal reasons preventing them from doing so,” said Isaac Stone Fish, a senior fellow with the Asia Society’s Center on U.S.-China Relations. “Reputational costs will be greater than financial costs.”

Reason for blacklisting Chinese AI

The US Commerce Department said the blacklisted entities had been “implicated” in human rights violations and abuses of Chinese Muslims, including Uighurs and Kazakhs.

“The U.S. Government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China,” said Secretary of Commerce Wilbur Ross.

China is allegedly holding more than 1 million ethnic Uighurs and other Muslims in what the UN describes as mass detention centers.

Could there be a hidden agenda?

Despite the noise on its human rights violations, China’s growing ascendancy in artificial intelligence is unquestionable. Therefore, the US actions against Huawei, and now the latest blacklist, were likely “just the prelude to a global battle for AI supremacy.”

China has a huge advantage in AI – the data generated by its 1.4 billion citizens. Over half of all people living in China use the internet via smartphones. The volume of data is crucial for machine learning and AI for extracting patterns.

Most importantly, there is state backing for the Chinese AI industry. The Chinese government intends for China to be a world leader in AI by 2030. This commitment has been backed up with funding in the billions of dollars and bureaucratic support.

Could the future of A.I. be Chinese? Perhaps not, if the US has its way.

[Related story: Center for Data Innovation on AI: China making big moves to catch up with the US ]

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.

Alt Insights

January 29, 2020

Venture Capital: The Kobe in “Bryant Stibel & Co”

Venture Capital: The Kobe in “Bryant Stibel & Co”

Latest Alternative Investment News
Private Equity Shops are Going on a Startup Spending Spree, Says Pitchbook
February 25, 2020     News, Private Equity, Venture Capital

A new Pitchbook report shows that private equity shops are snapping up an interesting alternative investment. Flush with dry powder, PE shops have been snapping up VC-backed startups, according to…
Activist Hedge Fund Looks to Shake Up Insurance Giant Prudential
February 25, 2020     Activist Updates, Hedge Funds, News

Activist hedge fund Third Point has taken aim at the 172-year-old insurance giant Prudential (LON: PRU). According to a new filing, Dan Loeb’s shop wants to split the firm into…
Alternative Assets: Funds Surpass $10 Trillion In AUM in 2019
February 25, 2020     Alternative Investments, Latest News, News

A new Preqin report shows that the alternative assets industry has reached “14 figures.” Total AUM surpassed $10 trillion for the first time in 2019. The industry added at least…
FinTech: QCash Signs Up Tropical Financial Credit Union For Small Loans
February 25, 2020     FinTech, News

QCash Financial, the US fintech and digital loan marketplace gained a major new client in Tropical Financial Credit Union (TFCU). TFCU has $700 million in assets and 65,000 members. QCash…

Scroll to Top