The Taiwan government announced that it would investigate Chinese artificial intelligence (AI) and biometrics company Megvii after it was blacklisted by the US government last week, Focus Taiwan reported

Why it matters: The investigation could put at risk Megvii’s recent contract to install a biometric security system at Taiwan’s Taichung Power Plant, with legislators wondering whether the firm’s technology raises national security concerns. 

  • It could also complicate Megvii’s plans for its initial public offering (IPO), which, according to co-founder and CEO Yin Qi, it planned to “firmly carry on” with despite “some disturbance” after being blacklisted along with 27 other Chinese government agencies and companies.
  • Yin also said the company has been preparing for possible supply shortages since May in anticipation of being blacklisted and barred from purchasing crucial x86 servers and GPUs subject to US export regulations. 

Details: In response to the Economic Committee’s concerns, Minister Sheng Jong-chin said he would ask the Ministry of Economic Affairs (MOEA)’s State-Owned Enterprise Commission to launch a comprehensive investigation of the blacklisted companies and instruct the ministry’s Information Management Center to conduct a review.  

  • Megvii won a bid to install the security system at Taichung Power Plant on Sept. 12, less than a month before being added to the US government’s blacklist. 
  • The system uses facial recognition to monitor contractors entering and leaving the facility. 
  • According to Shen Jong-chin, it does not include employees of the state-run Taiwan Power Company.  

Context: Megvii joins seven other Chinese companies and 20 of the country’s government agencies on the blacklist, including the police bureau in the Xinjiang Uighur Autonomous Region.

  • Beijing has since demanded that the US reverse its decision but hasn’t said whether it will retaliate. 
  • Goldman Sachs said in a statement Tuesday it was reviewing its involvement as a joint sponsor of Megvii’s IPO alongside JPMorgan Chase and Citigroup, according to CNBC. 
  • The Alibaba-backed AI firm is looking to raise up to $1 billion in a listing on the Stock Exchange of Hong Kong.  

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