Artificial intelligence (AI) startup Megvii is considering whether to delay its Hong Kong listing despite plans to go public before year-end, Bloomberg reported.
Why it matters: Megvii was among several of China’s biggest AI firms added to the US government’s so-called Entity List in October, effectively blocking them from sourcing American-made components.
- The move has raised questions about the future of these companies, as some source components from US manufacturers, including Nvidia.
- Following Megvii’s blacklisting, Goldman Sacks, one of the IPO underwriters, said it was reevaluating its involvement in the company going public.
- Taiwan’s government plans to investigate the firm following the ban, after Megvii was awarded a contract to install a security system for the Taichung Power Plant.
Details: Megvii is currently discussing with advisers whether to press ahead with the listing this month or postpone until the company is removed from the Entity List, sources told Bloomberg.
- Investors are worried about buying shares and Megvii may have trouble hitting a valuation of $3.5 billion, one of the people said. The company was previously valued at $4 billion after its last round of funding.
- The company still plans to hold its listing hearing in Hong Kong this month.
- Megvii said previously that it believes its inclusion on the blacklist was a “misunderstanding,” adding that the company would be “engaging with the US government on this basis.”
Context: Megvii was expected to become China’s first AI startup to go public, acting as a possible litmus test and paving the way for other companies in the industry to follow.
- The US blacklisting came after Megivii, along with the world’s most valuable AI startup Sensetime and surveillance camera manufacturer Hikvision, were accused of complicity in human rights violations against Muslim minority groups in China.
- Speech recognition giant iFlytek, as well rival AI startup Yitu and surveillance firm Dahua Technology, among others, were also added to the list.