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6697 - Techpoint Inc News Story

¥753 -27.0  -3.5%

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Sector
Technology
Size
Small Cap
Market Cap £129.8m
Enterprise Value £112.4m
Revenue £23.3m
Position in Universe 1881st / 3872

UPDATE 1-U.S. adds eight Chinese firms to trade blacklist

Wed 9th October, 2019 6:33am
(Updates with more recent valuation for SenseTime)
    Oct 8 (Reuters) - The U.S. government expanded its trade
blacklist on Monday to include some of China's top artificial
intelligence (AI) startups over Beijing's treatment of Muslim
minorities.  urn:newsml:reuters.com:*:nL2N26S1B6
    Below are details of major companies placed on the
blacklist, which effectively bans them from buying components
from U.S. companies. The move is likely to impact not just them
but also their suppliers, customers and financial backers.
    
    HIKVISION  002415.SZ 
    Formally known as Hangzhou Hikvision Digital Technology Co
Ltd, the firm is the world's largest purveyor of video
surveillance systems.
    It is also a vendor to police agencies in Xinjiang, where a
sweeping crackdown on Uighurs has drawn international
condemnation.
    Hikvision has not been allowed to sell to U.S. federal
government agencies since mid-August thanks to a law that
blocked five Chinese firms as possible security threats because
their products could allow access to sensitive systems.
    The company, which has a market value of about $42 billion,
is 42% owned by Chinese state investors and its two key
founders. It pulls nearly 30% of its 50 billion yuan ($7
billion) in annual revenue from overseas.
    Hikvision does not disclose suppliers, but Japan's video
interface firm Techpoint Inc  6697.T  said in a regulatory
filing in March that Hikvision accounted for 62% of its annual
revenue in 2018.
    Losing business with Hikvision could have a material and
adverse effect on its business, the Japanese firm said.
    John Honovich, founder of surveillance video research
company IPVM, said Hikvision and Dahua, another blacklisted
company, both use Intel Corp  INTC.O , Nvidia Corp  NVDA.O ,
Ambarella Inc  AMBA.O , Western Digital  WDC.O  and Seagate
Technology  STX.O  as suppliers. 
    The impact of the blacklisting on the Chinese companies
would be "devastating", he said. 
    
    SENSETIME GROUP LTD
    Incorporated in 2014 after receiving investment from IDG
Capital, SenseTime is one of the fastest growing AI startups in
China.
    Dual-based in Beijing and Hong Kong, SenseTime develops
applications for facial recognition, video analysis and other
areas including autonomous driving.
    Its technology employs AI to identify individuals and
analyse those identities using cameras, and has been used by
Chinese authorities to track and capture suspects in public
spaces such as airports and festivals.
    It says it is valued at more than $7.5 billion. Fresh
investment has come from SoftBank Group Corp  9984.T , a person
familiar with the matter said. Other backers include Fidelity
International, Hopu Capital, Silver Lake, and Tiger Global.
    The firm has also received funding from e-commerce firms
Alibaba  BABA.N  and Suning.Com Co Ltd  002024.SZ , state-backed
fund Sailing Capital and U.S. chipmaker Qualcomm Inc  QCOM.O .
    SenseTime counts China's Ministry of Public Security and
local heavyweights such as China Mobile  0941.HK , HNA Group and
Huawei Technologies  HWT.UL  as its major clients. 
    Its facial recognition unlocking and related technologies
are offered to smartphone brands OPPO and Vivo.
    The firm said in February it will create an alliance with
the Massachusetts Institute of Technology (MIT) to advance
research into AI. 
    
    MEGVII TECHNOLOGY LTD
    Founded in 2011 by Chief Executive Yin Qi and two friends
from Tsinghua University, the company is preparing an initial
public offering in Hong Kong to raise at least $500 million.
 urn:newsml:reuters.com:*:nL3N25M11M
    Widely known for facial recognition platform Face++, Megvii
will become the first Chinese AI firm to go public if the deal
goes ahead.
    The company provides facial recognition and other AI
technology to governments and companies including Alibaba, Ant
Financial, Lenovo Group Ltd  0992.HK  and Huawei.
    Its $750 million fundraising in May 2018 valued the firm at
slightly over $4 billion.
    It raised funds from Alibaba  BABA.N , Ant Financial,
Foxconn Technology, Bank of China Group Investment (BOCGI) Ltd,
the state bank's private equity arm, Macquarie Group, and ICBC
Asset Management (Global) Co.
    The Abu Dhabi Investment Authority, one of the world's
biggest sovereign wealth funds, also took part in a fund
raising.
    
    IFLYTEK CO LTD  002230.SZ 
    Founded in 1999, the speech recognition firm is a national
champion in voice-related AI.
    State-owned China Mobile is iFlytek's largest shareholder
with a 12.85% stake, according to its 2018 annual report.
    The MIT last year announced a five-year agreement with
IFlytek under which the Chinese firm would help underwrite three
research projects at the university's renowned Computer Science
and Artificial Intelligence Laboratory (CSAIL).
    The projects relate to AI in health care, speech
recognition, and what CSAIL described in its announcement as
creating "more human-like AI".
    A 2016 government procurement announcement named an iFlytek
subsidiary as the sole supplier of 25 "voiceprint" collection
systems to police in Kashgar, a city in Xinjiang, Reuters
reported earlier.  urn:newsml:reuters.com:*:nL4N23K115
    Another iFlytek unit signed a deal with Xinjiang's prison
administration bureau.
    
    ZHEJIANG DAHUA TECHNOLOGY  002236.SZ 
    The video surveillance equipment maker went public in 2008
and is among five firms which had been barred from selling to
U.S. government agencies, along with Hikvision.
    The company, which claims to be the world's second largest
surveillance provider, says its products and services are
applied over 180 countries and regions. 
    Its products have been used in events such as the Rio
Olympics, the G20 Hangzhou Summit, and a subway project in
Brazil.
    
    XIAMEN MEIYA PICO INFORMATION CO  300188.SZ 
    Established in 1999, the company is a data recovery expert
and says it provides products and services for law enforcement
and government agencies all over the world.
    Its digital forensics services include extracting evidence
from digital media such as computers, mobile phones and data
storage cards.
    The company says it provided security support for events
such as the Beijing Olympic Games, Guangzhou Asian Games and
Shanghai World Expo.
    
    YITU TECHNOLOGY
    The facial recognition technology firm was founded in 2012
and raised funds from investors including Sequoia Capital, Jack
Ma's private equity fund Yunfeng Capital, and Hillhouse Capital
Group.
    The company claims its facial recognition platform is
capable of identifying over 1 billion faces within one second.
    It said in 2015 its technology is used at China Merchants
Bank's  600036.SS  1,500 outlets. It worked with Alibaba Cloud
to build a cloud platform for smart transportation management.
    ($1 = 7.1234 Chinese yuan)

 (Reporting by Miyoung Kim in Singapore, Josh Horwitz in
Shanghai, Munsif Vengattil in Bengaluru; Editing by Jan Harvey)
 ((miyoung.kim@thomsonreuters.com; 65 6870 3026; Reuters
Messaging: miyoung.kim.thomsonreuters.com@reuters.net))
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