Chinese artificial intelligence startup SenseTime’s initial Hong Kong public offering plans to offer 1.5 billion shares to raise a total of US $741 million. The trading of shares is set to start on December 30. This comes despite being blacklisted by the US government a few weeks back, which was supposed to derail this IPO process. It is now the largest AI software firm in Asia, with an estimated 11% market share and a market value of around US $16 billion.

Waves of accusations and controversies

The Chinese government has been accused of persecuting Muslim minorities, specifically the 11 million Uyghurs who live in China. Different confidential documents have revealed that facial recognition technology is being continually used to carry out mass surveillance of the members of Uyghur minorities. Such facial recognition technology can detect minorities and have been actively used by police to target such communities.

Chinese AI companies such as SenseTime are behind the development of this software for “minority identification.” A patent filed in 2019 by SenseTime for a “Method and device for retrieving images” mentions Uyghurs as ethnicity, which the user can identify by inputting specific parameters. SenseTime later declared the patent as “regrettable” and that it will try to modify it at the next available opportunity. All major Chinese tech companies, including SenseTime, also received massive funding from China’s Ministry of Public Security under Skynet and Sharp Eyes plans.

During the US-China trade war in 2019, SenseTime AI was blacklisted by the US government as the Trump administration accused it of aiding China’s violation of human rights in the Xinjiang region. However, it continued to thrive during the COVID-19 pandemic due to the increasing demand in China for facial recognition technology to battle coronavirus. It has also successfully raised massive capital in its different funding rounds to keep improving its technology and was briefly the world’s most valuable AI-based startup in 2018.

SenseTime Hong Kong IPO

The company decided to sell 1.5 billion shares in December 2021 to raise US $767 million, with cornerstone investors initially covering $450 million of the investment. However, things got complicated when the US treasury department sanctioned the SenseTime group for developing facial recognition technology that targets particular ethnic groups. SenseTime vehemently denied all accusations as unfounded and postponed its plans for IPO launching.

However, shortly after the US ban, it relaunched its Hong Kong IPO plans with investment from cornerstone organisations increased to $512 million, and shares to start trading from December 30. This makes co-founder Tang Xioou, an MIT graduate who owns a 21% stake in the company, one of the wealthiest people in the world with an estimated worth of US $3.4 billion! 

SenseTime is the first of China’s four so-called ‘AI Dragons‘ to go public, and despite its hefty valuation, is still losing money. It remains to be seen whether they can start making a profit in the face of hostility from the US and different human rights groups, despite the backing of the Chinese government.