China's AI Leader iFlytek Projects $65M Loss Amid Heavy Investments And Rising US Pressure

iFlytek, a prominent artificial intelligence (AI) technology firm in China, predicts a loss of nearly $65 million for the first half of 2024 due to heavy investments amid mounting pressure from the United States.

What Happened: iFlytek released an earnings preview over the weekend, indicating a net loss between 380 million yuan ($53.31 million) and 460 million yuan ($64.53 million) for the first half of the year. This is a stark contrast to the net profit of 73.57 million yuan ($10.1 million) reported during the same period in 2023, Nikkei Asia reported on Monday.

Following this announcement, iFlytek’s China-listed shares saw a nearly 7% drop in Monday’s morning session. The company attributes this loss to increased investments, including those in its latest AI language model, Spark V4.0.

Despite being sanctioned by the U.S. under the Trump administration for alleged human rights violations, iFlytek has been heavily investing in the self-control of core technologies and supply chains. The company continues to focus on deploying its latest technologies with mainland Chinese partners across various sectors, including education, medicine, automobile, and enterprise intelligence.

See Also: Trump’s Trade Tariffs Would Be ‘Highest In The Postwar Period’ And Increase Inflation, Says Goldman Sachs

Why It Matters: The U.S. has been tightening its grip on China’s AI industry. In June, the Biden administration proposed measures to limit China’s access to advanced AI chips, such as gate-all-around (GAA) technology. This move, along with other regulatory challenges, has led many Chinese AI startups to relocate to Singapore for better access to global investors and technologies.

Despite these hurdles, China continues to lead in the global race for generative AI patents, filing six times more patents than the U.S., even amid U.S. sanctions, according to a UN report.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari