US-blacklisted Chinese AI giant Megvii

Megvii, a Chinese AI company that the US has banned, is reportedly planning further layoffs in the midst of an intensifying tech spat with Beijing.

Megvii, a company renowned for its cutting-edge face recognition technology, has reportedly begun a fresh wave of job cutbacks across many areas.
Worker layoff rumors in China’s AI sector reflect the concerns brought on by further limitations and US sanctions.

Megvii Technology and Facial recognition

According to two people briefed on the situation, Megvii Technology, one of the world’s leading developers of facial-recognition systems, is conducting a new round of layoffs at various departments, indicating challenges in China’s artificial intelligence (AI) industry amid heightened tensions between Beijing and Washington.

According to one of the sources, each employee affected by the dismissals, which began this month, has been given a compensation package based on the number of years they have worked for the firm plus one month’s income.

Separately, the layoffs were announced on Maimai, a Chinese professional networking site. At least four individuals who were later identified as Megvii workers had written remarks about them under assumed identities. According to a post on Maimai, one of these people was requested to leave the same day the notification was given.

A Megvii official from Beijing explained the layoffs, which only affected a tiny percentage of the company’s staff, as “regular personnel adjustments.”

Payroll size – Megvii

According to its prospectus from September of last year, Megvii had roughly 2,900 workers by the end of 2020, up from 2,526 in 2019 and 1,965 in 2018. The privately held corporation has not disclosed the payroll size for 2021 and 2022.

Because layoffs involving more than 20 employees need notice to authorities under the Ministry of Human Resources and Social Security, Chinese technology businesses have a history of downplaying news regarding layoffs. As a result, discharges are frequently referred to as “regular business adjustments” or “so-called optimization.”

The AI industry behemoth SenseTime Group, which is listed in Hong Kong, was the object of rumors that it was firing staff in September. In response, SenseTime released a statement explaining that it only made changes to “modify its organization and talent structure” and that the firm’s overall headcount actually went up somewhat.

The US trade penalties on Megvii, SenseTime, and other blacklisted mainland AI businesses

The US trade penalties on Megvii, SenseTime, and other blacklisted mainland AI businesses, as well as further restrictions imposed by the Biden administration, continue to bring about uncertainty, which is reflected in rumors regarding layoffs in the Chinese AI industry.

As a result of suspected human rights crimes against Muslim minorities in Xinjiang, 28 Chinese businesses and public security agencies were placed on the US trade blacklist in 2019, including the state-owned Hangzhou Hikvision Digital Technology Co, Megvii, and SenseTime.

The idea of enacting new export regulations that would restrict China’s access to innovations in the realm of quantum computing as well as AI software was reportedly being investigated by the Biden administration last week.

That would come after Washington’s decision earlier this month to broaden the scope of US tech export regulations aimed at mainland chip manufacturers.

Megvii, for its part, has refuted the allegations made by the US government.

According to its prospectus, Megvii, which was established in 2011, recorded a net loss of 1.86 billion yuan (US$256 million) in the first half of 2021.

The Face++ face recognition software business, which is based in the Cayman Islands, received approval to list on the Star Market of the Shanghai Stock Exchange in September of last year. The procedure for an initial public offering has not yet begun.

Computer manufacturer Lenovo Group, e-commerce behemoth Alibaba Group Holding, and its financial technology subsidiary Ant Group are a few of Megvii’s mainland Big Tech investors. The South China Morning Post is owned by Alibaba.