China AI dragon SenseTime plunges after surprise death of U.S.-sanctioned firms co-founder
SenseTime Group Inc. plunged its most in more than a year after its co-founders surprise death spooked investors already grappling with the fallout from slowing growth and US sanctions.
The Chinese AI firm slid as much as 18% in Hong Kong before recouping some of those losses to finish Monday 11% lower.
SenseTime disclosed that co-founder and major shareholder Tang Xiaoou died on Friday after an illness. Born in 1968, the Massachusetts Institute of Technology graduate and Hong Kong professor was regarded as a pioneer in Chinas AI sector, helping create one of the nations leaders in facial and image recognition.
His company, earlier backed by Alibaba Group Holding Ltd., listed in Hong Kong in one of the most highly anticipated debuts of 2021. Tang had a 21% stake in SenseTime, according to the firms 2022 annual report. His net worth last stood at $1.1 billion, the Bloomberg Billionaires Index shows.
The Chinese firms growth has slowed dramatically in the face of rapidly intensifying competition. The US government blacklisted the company in 2019 on allegations related to human rights violations in Xinjiang. That restricted its access to capital and crucial US tech components, compounded in recent months by new curbs on the sale of advanced AI chips and chipmaking equipment to Chinese firms.
Its shares have fallen in recent weeks after short-seller Grizzly Researchaccusedthe firm of inflating revenues, which SenseTime has denied. Before Monday, the stock traded at HK$1.26 less than a third of its listing price.
Tangs sudden death may influence control of the company given the large slice of SenseTime he owns, particularly of the Class A stock he and his three co-founders hold. The outcome of his shareholding for now remains unclear, though SenseTime on Monday stressed that Tangs death should have no material impact.
The direct reason (for the stock slump) is the sudden death of the co-founder, said Willer Chen, a senior analyst at Forsyth Barr Asia. The voting power of other co-founders and directors may change accordingly. So for sure that could affect the business.
SenseTimes focus this year turned from its traditional strengths in facial recognition to generative AI. It was among the first Chinese tech firms to receive government approval to publicly roll out ChatGPT-like services.
Chinas AI arena has experienced an influx of capital and talent. But rivalry is fierce as startups and big companies from Baidu Inc. to SenseTime compete to develop their own solutions. SenseTime was considering raising funds and carving out its autonomous driving and health care units, Bloomberg Newsreportedthis month.
In its statement, SenseTime did not specify Tangs illness but paid tribute to his contributions.
Tanghailedfrom the world of academia and had long been involved in developing the artificial intelligence required for facial recognition. He got his PhD from MIT in 1996, where he studied underwater robotics and computer vision.
Tang worked for Microsoft Research Asia for a few years before co-founding Shanghai-based SenseTime in 2014 with Xu Li, then a research scientist at Lenovo Group Ltd.
The spirit and achievements of Prof. Tang will live on. The directors and all employees of the company are committed to completing his mission, never forgetting the companys original aspiration, and forging ahead, the company said in its statement.
2023 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice| Do Not Sell/Share My Personal Information| Ad Choices
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions.
