United States government added 8 Chinese technology companies into the blacklist, where they were accused of violation in Xinjiang muslim minority human right.
#Business #Surveillance
According to Bloomberg on 15 Oct, United States government added 8 Chinese technology companies into the blacklist, where they were accused of violation in Xinjiang muslim miniority human right. The companies listed will be banned from doing business with US enterprises unless with government’s permission.
The 8 Chinese companies included Hikvision (002415.SZ), Meiya Pico (300188.SZ), iFLYTEK (002230.SZ), dahuatech (002236.SZ). Hikvision and dahuatech were suspended for trading on the same day. The blacklist also included Hong Kong ‘unicorn’ AI company Sensetime; AI leader Megvii was planning to launch an near 1 billion USD IPO in Hong Kong, as well as Yituech and Mirco-nanotech.
Face recognition technology has caused a global stir recently; Amazon announced earlier to set up rules to restrict applications for such technology. However, the Chinese ministry of information and technology announced starting from December, they will implement full scale face recognition procedure for mobile internet user; to ensure users are browsing the web with their own accounts. In Hong Kong, citizens have been opposing the installation of smart lamppost around Kowloon Bay area, where protestors pulled down a few of them.
People close to the matter told Appledaily the Graphic Processing Unit (GPU) is the core component for face recognition technology, major shareholder for GPU market are US corporation Nvidia and AMD. China’s GPU development is behind the major competitors and its worse than the mobile chip development. The damage of the blacklist is even worse than banning Huawei.
In Megvii’s IPO prospectus, it stated that the "intelligence hardware may contain components which are restricted by exportation rules, including Central Processing Unit (CPU), GPU and memory... It might be similar or even tighter restrictions from the United Stats or other jurisdictions and may cause unfavourable impact to the business; any government action may increase production cost significantly, causing delay in the company technology, production and solution development, as well as supply chain stability.“
Sensetime co-founder and CEO Xu Li explained in September that the company will use the sourced capital to enter the semi-conductor industry. They have been developing AI training chips over the last 2 years, the chips acted as a supplement to Nvidia’s chips and it showed that the Sensetime chips still heavily rely on US made GPUs.
People in the industry stated that “as the number of GPUs increase, the faster the processing speed is. However you cannot buy GPU directly now, you can only get them via renting datacentres. It is similar to renting a house indefinitely without buying one, in the long term it will impact the GPU development.”
Big players like Alibaba and Huawei have been trying to develop their own chips actively to counter US’monopoly. However there are not many companies specialising in GPU in China right now.
In the "A share" stock market space, Jingjiamicro is the only GPU company (300474.SZ).
Jingjiamicro claimed that they have successfully developed JM5400 GPU in 2004, the first high performance GPU with independent intellectual property right in China. In Sep 2008 it announced GPU JM7200, where it has started the manufacture and packing process. Jingjiamicro’s first order was from an entity under the State Council of the People’s Republic of China this March.
China’s GPU development is estimated 6 years behind USA
Looking at the specs for M7200 published in 2018, the 2 pairs of DDR3 support a maximum of 4GB memory, with highest clock rate at 1300MHz. Compared with Nvidia’s GTX2080 from last year, DDR6X supports 8GB memory, highest clock rate being 1800 MHz. The specs for M7200 is similar to Nvidia’s GT640 series, which is a product of 2012, aka 6 years behind.
Jingjiamicro raised 880m RMB in June last year to develop JM9271 GPU chip.
They claimed that JM9271’s performance is on par with Nvidia’s 2016 product GTX1080. However based on Jingjiamirco’s JM5400, they have yet spent 4 years to develop an updgrade version, JM7200, with minimal incremental performance. People are sceptical whether JM9721 can be launched any time soon.
Earlier this year, apart from implementing economic and trading restriction on multiple Chinese companies, US government has also banned Sensetime, Megvii and Yitutech from doing business in America. Ministry of Finance explained those companies have operated or took part in activities related to national safety or against foreign policy interest, causing significant risk.
Chinese AI companies already felt the impact from the ban, together with Hong Kong’s ‘anti-extradition bill’ protests, enforcement of anti-mask law, people are worried these companies will infiltrate their individual privacy and caused the fund raising even more difficult. People close to the matter indicated the capital chain is already feeling the stress.
“Companies rely the funding to invest in downstream business to increase revenue. Now no company believes in Chinese companies, hence there’s no capital for the companies to grow or to increase balance sheet...the current cashflow is negative and budget has been cut without any explanation from management.’ He also added although the company may not close down immediately, the new measures from the US is going to bring chain effect and cause huge impact in the long term development.
Source: Apple Daily, https://hk.finance.appledaily.com/finance/realtime/article/20191013/60147063