SenseTime: Should the Chinese Artificial Intelligence Software Provider Pivot toward Generative AI?

Case Code: BSTR688 Case Length: 11 Pages Period: 2024 Pub Date: 2025 Teaching Note: Available

Price: Rs.400 Organization : SenseTime Group Inc. Industry : Technology & Communications Countries : China Themes: Diversification Strategy, Globalisation Growth Strategy,Artificial Intelligence

Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

Products and Services

The history of SenseTime went back to 2014. While Tang was teaching at the Chinese University of Hong Kong (CUHK), his team of researchers comprising 11 students launched a face recognition algorithm called DeepID, which could digitally recognize images, especially the faces of human beings. The algorithm could identify faces with an accuracy rate of 99.15%, making the results more reliable than if the human eye itself was involved..

Products and Services

SenseTime developed several AI technologies including face, image, object, and text recognition; medical image and video analysis; remote sensing; and autonomous driving systems. These AI technologies were deployed in industries ranging from healthcare to finance, online entertainment to education, retail to security, smart cities to smartphones, and more. SenseTime had a deep learning supercomputing platform which comprised more than 8,000 Graphics Processing Units (GPUs). Using the funding it received from Alibaba, it built its AI platform and enhanced its technological innovation..

Partnerships

Over the years, SenseTime entered into various partnerships to provide several AI applications. In 2017, it partnered with American semiconductor company Qualcomm Incorporated (Qualcomm) to increase facial recognition technology in the latter’s hardware. The same year, i.e. in 2017, it partnered with Japanese automaker Honda Motor Corp. for autonomous driving technologies in China. The company applied its core technologies in detecting vehicles, traffic signs, pedestrians, driving lanes, and large scenes. It also explored developing microchips embedded systems for shortening the R&D cycle for fully functional AI-enabled automobiles..

Troubling Times

From 2020 to 2021, the Covid-19 pandemic drove the demand for AI systems in China as several companies used software developed by SenseTime to limit the spread of the coronavirus. SenseTime’s annual revenue reached RMB4.7 billion in 2021, more than double the RMB1.85 billion revenues it had earned in 2018..

Competition

SenseTime’s major competitors in the Chinese AI surveillance market included Megvii, Hikvision, CloudWalk, and Yitu. The AI surveillance market was driven by an increasing demand for efficient and intelligent security solutions in commercial settings such as airports, banks, and retail stores.

The Generative AI Landscape

With the tightened US controls and the traditional AI segment becoming increasingly saturated, many Chinese AI giants were exploring the Generative AI segment in China..

Looking Ahead

When SenseTime reported losses of RMB6.44 billion for FY 2023, Xu stated, “It is an inevitable phase of the cycle.” He added that technology start-ups such as SenseTime incurred losses for several years due to their huge investments in Research & Development (R&D) before they began to find ways to produce their products in larger quantities and commercialize them..

Exhibits

Exhibit I: Funding Received by SenseTime
Exhibit II: SenseTime’s Four Year Consolidated Income Statement

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