SenseTime’s stock market debut may be spoiled by US-China tensions

The Chinese artificial intelligence startup was supposed to price shares Friday in its initial public offering in Hong Kong, where it planned to raise up to $767 million. But its preparations to go public were overshadowed by news that Washington was adding SenseTime to another trading blacklist.The US Treasury department confirmed Friday that it had decided to place the company on a list of “Chinese military-industrial complex companies,” in which US President Joe Biden has banned Americans from investing. The US Treasury said SenseTime was sanctioned because of the role its technology plays in enabling human rights abuses against the Uyghurs and other Muslim minorities in Xinjiang.”SenseTime … owns Shenzhen Sensetime Technology Co. Ltd., which has developed facial recognition programs that can determine a target’s ethnicity, with a particular focus on identifying ethnic Uyghurs,” the department said in a statement. “When applying for patent applications, Shenzhen Sensetime Technology Co. Ltd. has highlighted its ability to identify Uyghurs wearing beards, sunglasses, and masks.”The impending US action was first reported by the SenseTime, one of the world’s most valuable AI companies, has already faced controversy in recent years Earlier this year, IPVM, an independent group that monitors video surveillance technology, said that SenseTime was mentioned in a patent application in July 2019, which suggested that it could identify people by ethnicity, specifically singling out “Uyghur” as a possibility.The finding was the latest in a series of revelations questioning the facial recognition practices of Chinese tech giants, including Alibaba (BABA) and Huawei.In a statement at the time, SenseTime told CNN Business that the reference to Uyghurs was “regrettable,” adding that it was “one of the examples within the application intended to illustrate the attributes the algorithm recognizes.””It was neither designed nor intended in any way to discriminate, which is against our values,” a spokesperson said. “We will update the patent at the next available opportunity.”More recently in its investment prospectus, SenseTime said that its “previous sales to customers in Xinjiang were in compliance with” Chinese laws, and that income from those sales were less than 1% over the last three years.The company was planning to price shares between 3.85 and 3.99 Hong Kong dollars, or roughly 50 cents apiece, according to a stock exchange filing. That would put its valuation at approximately $17 billion at the top end of the range. SenseTime was due to start trading in Hong Kong on Friday, December 17.— Brian Fung and Ben Westcott contributed to this report.