Chinese AI champion iFlyTek back in the red as operations struggle amid coronavirus pandemic

Artificial intelligence (AI) company iFlyTek, China’s champion in speech recognition technology, expects to report a first-quarter net loss, owing to difficult operating conditions amid the coronavirus pandemic.

The Shenzhen-listed firm projected a net loss of 125 million yuan to 135 million yuan (US$17.7 million to US$19.1 million) in the March quarter, compared with a net profit of 101.9 million yuan a year ago, according to its stock exchange filing on Monday.

It indicated that the pandemic had “stalled project operation, delivery and inspection”, which affected “the progress of revenue realisation”.

Still, iFlyTek said the pandemic is unlikely to severely hurt its business over the long term, as AI gains an “increasingly favourable” environment for its development in the world’s second largest economy.

The broader technology industry in China is predicted to see a 2 per cent drop in enterprise spending in the first quarter because of the pandemic, according to a recent report by Forrester Research. It said tech purchases would recover in the second half of this year, but forecast overall growth to reach 4.5 per cent, which is lower than its previous estimate.

In January, Forrester had projected China’s total business and government tech spending to grow 7 per cent to US$174 billion.

For iFlyTek, its contract sales from newly won bids surged 91 per cent last quarter to 920 million yuan, which is expected to spur revenue growth in the second quarter.

The company said it has spent about 35 million yuan in the first quarter to develop an AI-enabled online education platform, smart medical consultation software and auto-calling robots to help in efforts to curb the spread of Covid-19.

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Liu Qingfeng, iFlyTek’s founder, chairman and president, said in December that China’s AI efforts are starting to pay off with a fast rate of industrial adoption, and have entered a “critical stage”, without elaborating.

Founded in 1999 and based in Hefei, capital of eastern China’s Anhui province, iFlyTek has become the country’s foremost developer of advanced speech recognition and natural language processing systems. The company, which has state-owned China Mobile as its largest shareholder, has made its products available in 200 countries and territories around the world.

Last month, iFlyTek established a new joint venture with South Korean software company Hancom Group. Their venture, Accufly.AI, launched its AI Outbound Calling System to assist South Korea’s government in providing information to individuals who have been in close contact with or have had a confirmed coronavirus case.