Tech Insider: SenseTime Plunges on Co-Founder’s Death, EV-Maker Nio’s $2.2 Billion Abu Dhabi Cash Boost

TikTok hits $10 billion user spending milestone, ByteDance rebuts claims it violated OpenAI terms of use, Chinese game developers overseas sales dwindle

Nio’s booth at the Guangzhou International Automobile Exhibition on Nov. 26. Photo: VCG

AI Firm SenseTime nose-dives after death of co-founder

SenseTime Group Inc. plunged its most in more than a year after its co-founder’s sudden death spooked investors already grappling with the fallout from slowing growth and U.S. sanctions.

Shares of the Chinese artificial intelligence (AI) firm slid as much as 18% in Hong Kong on Monday, the biggest loss since July 2022.

SenseTime disclosed that co-founder and major shareholder Tang Xiao’ou died on Friday after an illness. Born in 1968, the Massachusetts Institute of Technology graduate was regarded as a pioneer in China’s burgeoning AI sector, helping create one of the nation’s leaders in computer vision.

Nio wins $2.2 billion Abu Dhabi investment

Nio Inc. has scored another capital injection from the Middle East after Abu Dhabi-backed fund CYVN Holdings LLC said it will invest $2.2 billion in the loss-making Chinese electric-car maker.

Upon completion of the deal, CYVN will own a 20.1% stake in Nio, having subscribed for 294 million newly issued shares, according to a statement from the companies Monday. CYVN will also be entitled to nominate two directors to Nio’s board.

CYVN already invested $738.5 million in the Shanghai-based carmaker in July and later bought existing shares from an affiliate of Tencent Holdings Ltd. for $350 million, the statement said.

ByteDance rebuts claims it violated OpenAI terms of use

ByteDance Ltd. has rebutted claims it violated OpenAI’s terms of use when using the U.S. startup’s technology to build its own AI model.

The TikTok parent had been “secretly” and extensively using OpenAI’s technology to develop its own competing large language model (LLM) via Microsoft’s Azure platform, codenamed Project Seed, according to a report on The Verge, citing internal sources.

OpenAI, which is backed by Microsoft Corp., bans rival AI companies from using the output from ChatGPT and its other services to develop their own competing AI models, according to the terms of use it sets out for business and developer users.

“In April, we implemented a clear internal requirement that data produced by GPT should not be added to the training datasets of the company’s self-developed models,” a ByteDance spokesperson said in a statement to Caixin Monday. The company also gave compliance training to the engineering team regarding the terms of service when using GPT.

In a statement to The Verge, OpenAI said it had suspended ByteDance’s account as it investigates further, while noting that the company’s use of its API was “minimal.”

OpenAI confirmed the statement with Caixin early Tuesday.

TikTok becomes first non-game app to hit $10 billion user spending milestone

ByteDance-owned video-sharing platform TikTok has generated $10 billion in users’ spending, becoming the first non-gaming app to hit the milestone, according to market data provider data.ai.

TikTok is on track to see its revenue reach $14.6 billion in 2024, making it the highest earning mobile app ever, data.ai said in a report released early December.

“Consumers are spending more than $11 million a day tipping their favorite content creators, propelling TikTok past the world’s most lucrative mobile game to date,” said Lexi Sydow, head of insights at data.ai.

Overseas sales of Chinese self-developed games drop

China’s game developers have recorded a second straight year of declines in overseas sales, as their expansion continues to encounter challenges such as evolving privacy regulations.

Actual sales revenue from China’s self-developed games in overseas markets dropped 5.7% to $16 billion this year, according to data released by the China Audio-Video and Digital Publishing Association. The decline is steeper than the 3.7% decrease in 2022.

“This suggests that international instability, stiff market competition, and shifts in privacy policies have posed challenges to global expansion and increased operational costs,” said Zhang Yijun, a vice chairman of the industry group, at a conference in Guangzhou.

The U.S. and Japan remain the top overseas markets for China’s self-developed mobile games this year, accounting for nearly one-third and one-fifth of overseas sales revenue, respectively, according to the association’s latest annual gaming industry report.

Nvidia is in the process of developing China-specific chips after the U.S. tightened export controls to block the shipment of semiconductors the company had earlier designed for China. Photo: VCG

AI comes down from the cloud

The release of OpenAI’s ChatGPT chatbot in late 2022 kicked off a global race to develop large language models (LLMs) — a type of artificial intelligence (AI) that can mimic human intelligence — and sparked competition among device manufacturers and chipmakers.

China’s mobile-phone makers are no exception, but there’s a tech twist.

Vivo’s latest smartphone assistant is powered by a form of generative AI that runs primarily on the devices themselves, rather than from cloud-based AI that relies on data centers to process resource-intensive tasks. Known as edge AI, this form of the technology is adept at making real-time decisions without the internet.

Companies and investors anticipate that the adoption of edge AI will revitalize the languishing consumer electronics market. However, challenges persist for these models due to high processing power requirements and extensive use of memory and storage space, which could significantly increase the cost. For mobile devices, LLMs face challenges in energy consumption since battery energy density is a hardware bottleneck that is difficult to overcome in the short term, analysts said.

Hydrogen’s star rises

In the quest for cleaner energy sources, hydrogen’s star is rising.

China is one of a growing number of jurisdictions where interest in the gas from policymakers and investors is heating up. Hydrogen’s advantage as a fuel is clear: it produces no tailpipe exhaust.

China launched its first long-term plan for hydrogen last year, setting clear targets for the development of “green hydrogen” by 2025 and seeking to significantly increase its role in the nation’s energy mix through 2035.

China’s abundant wind and solar power capacity lays a foundation for the production of green hydrogen. The nation also benefits from the low manufacturing cost of hydrogen production equipment. Nevertheless, ensuring green hydrogen makes economic sense will be an uphill battle for all involved, insiders and experts told Caixin. The sector will need to control high costs to stoke market demand, while overcoming greenwashing efforts by producers of cheaper, dirtier products.

U.S. is looking into Nvidia’s China-market chips, Raimondo says

Commerce Secretary Gina Raimondo said the U.S. is looking into the specifics of three new AI accelerators that Nvidia Corp. is developing for China, after vowing earlier this month to restrict any new chips that give the Asian country AI capabilities.

“We look at every spec of every new chip, obviously to make sure it doesn’t violate the export controls,” she said Monday in a Bloomberg interview.

Nvidia is in the process of developing China-specific chips after the U.S. tightened export controls to block the shipment of semiconductors the company had earlier designed for China.

The new processors abide by the stricter China guidelines that the Commerce Department announced earlier this fall, Nvidia’s CEO said last week.

Temu’s legal beef with Shein boils over again

Chinese-owned online marketplace Temu is suing fast-fashion rival Shein in the U.S. over what it calls “intensified” anticompetitive practices, reviving a legal fight between the e-commerce upstarts after both dropped earlier lawsuits against each other.

Whaleco Inc., which operates as Temu, has accused Shein of hatching a “desperate plan” to undercut its business, according to a U.S. court filing.

Wednesday’s complaint accused Shein of filing tens of thousands of copyright takedown notices against Temu, forcing fashion suppliers into exclusive agreements, and threatening Temu merchants.

Representatives for Shein didn’t respond to a request for comment. A Temu representative said the latest move was a result of Shein’s escalating anticompetitive behavior. “Their actions are too exaggerated; we had no choice but to sue them,” the spokesperson added.

JD.com founder channels Jack Ma in call for change

JD.com Inc. founder Richard Liu urged staff to address deep-seated issues within his e-commerce company, in an internal memo that echoed a call to arms issued by Alibaba Group Holding Ltd. founder Jack Ma last month.

Liu was responding to an employee’s post on a JD.com forum over the weekend, in much the same way Ma addressed and amplified an Alibaba staffer’s views about rising competition. The unnamed employee listed a litany of problems from poor merchant support to an overly pricey item list, according to posts that were confirmed by a JD spokesperson. The billionaire founder agreed with that assessment and called for change.

“I feel our brother has said it all too well,” Liu wrote.