Exclusive: China's SenseTime expects $750 million 2019 revenue despite U.S. ban: sources

[December 06, 2019]  By Yingzhi Yang and Brenda Goh

BEIJING (Reuters) - Chinese artificial intelligence (AI) start-up SenseTime, which Washington put on a trade blacklist in October, expects its 2019 revenue to increase by more than 200% year-on-year to around $750 million, two sources familiar with the matter said.

This suggests strong demand for SenseTime's technology, which has been used by smartphone makers Xiaomi and Oppo as well as China Mobile and Alibaba Group, despite the ban since October on it buying certain components from U.S. firms without government approval.

However, SenseTime's 2019 sales growth forecast is sharply lower than its annual revenue growth between 2015 and 2017, which it said last year was 400% in each of those years.

SenseTime made the 2019 prediction to investors in briefings, said the sources, who declined to be named as the information was not public.

The company was among eight Chinese tech firms placed on the U.S. entity list in October amid ongoing trade tensions. The United States alleges the companies have played a role in human rights abuses against Muslim minority groups in China.

SenseTime said at the time that it strongly opposed the U.S. ban and would work with relevant authorities to resolve the situation.

A SenseTime spokeswoman did not immediately respond to a request to comment.

AI CHIPS

Hong Kong-headquartered SenseTime, which provides technology-based applications including, facial recognition and video analyzing and autonomous driving, says it is valued at more than $7.5 billion.

Visitors walk past the stall of the artificial intelligence and facial recognition technology company Sensetime at the Security China 2018 exhibition on public safety and security in Beijing, China October 23, 2018. REUTERS/Thomas Peter/File Photo

SenseTime has not disclosed how the U.S. ban might impact its supply chain, but its contingency plans include developing AI chips on its own, a separate source told Reuters.

The five-year-old start-up counts Qualcomm Ventures, a unit of U.S. semiconductor giant Qualcomm, as one of its strategic investors. Other existing investors include SoftBank Vision Fund, HOPU Investment Management Company, Silver Lake Partners and Alibaba.

Plans by SenseTime's Chinese rival Megvii, which was also blacklisted by the U.S., to list in Hong Kong have been delayed until next year, IFR reported on Tuesday.

Beijing-based Megvii, also known as Face++, said in October it opposed the blacklisting and would prepare contingency plans. It booked a loss of 3.35 billion yuan ($472 million) on revenue of 1.43 billion yuan in 2018, its IPO prospectus showed.

(Reporting by Yingzhi Yang in Beijing and Brenda Goh in Shanghai; Editing by Tony Munroe and Alexander Smith)

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