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The latest round of lay-offs at Megvii Technology is just “normal personnel adjustment”, according to a company representative. Photo: Simon Song

US-blacklisted Chinese AI giant Megvii said to carry out fresh lay-offs amid escalating tech war between Washington and Beijing

  • Megvii, known for its advanced facial recognition technology, has started a new round of job cuts at multiple departments, sources said
  • Speculation about retrenchment of workers in China’s AI industry reflects the uncertainties brought by US sanctions and further restrictions
Megvii Technology, one of the world’s foremost facial-recognition system developers, is conducting a fresh round of lay-offs at multiple departments, according to two people briefed on the matter, signalling difficulties in China’s artificial intelligence (AI) industry amid heightened tensions between Beijing and Washington.

Workers affected by the dismissals, which started this month, have each been offered a compensation package based on the number of years served in the company plus a month’s salary, according to one of the people.

The job cuts were separately revealed on Maimai, the Chinese professional networking platform, where at least four users – later verified as Megvii employees – had anonymously posted messages about the lay-offs. One of these persons was asked to leave on the same day notification was received, according to a post on Maimai.

A representative of Beijing-based Megvii described the terminations as “normal personnel adjustment”, which affected only a small portion of the company’s workforce.

Employees of Megvii Technology are seen at their desks inside the company’s headquarters in Beijing on May 13, 2019. Photo: Simon Song

Megvii had about 2,900 employees at the end of 2020, up from 2,526 in 2019 and 1,965 in 2018, according to its prospectus from September last year. The privately-held company has not published its payroll size for 2021 and 2022.

Chinese technology companies have been known to downplay news about lay-offs because dismissals involving more than 20 employees require notice to authorities under the Ministry of Human Resources and Social Security. As such, job cuts are typically described as part of so-called optimisation or normal business adjustments.

In September, Hong Kong-listed AI giant SenseTime Group was the target of rumours that it was laying off people. In response, SenseTime said in a statement that it merely took action to “adjust its organisation and talent structure”, and that the firm’s total workforce slightly increased.
Still, speculation about retrenchment of workers in China’s AI industry reflects the continued uncertainties brought by US trade sanctions against Megvii, SenseTime and other blacklisted mainland AI firms, and further restrictions under the Biden administration.


Meet the founder of Megvii, one of China’s most ambitious AI startups

Meet the founder of Megvii, one of China’s most ambitious AI startups
In 2019, state-owned Hangzhou Hikvision Digital Technology Co, Megvii and SenseTime were among 28 Chinese companies and public security bureaus put on the US trade blacklist over alleged human rights violations against Muslim minorities in Xinjiang.
The Biden administration was reported last week to be exploring the possibility of implementing new export controls that would limit China’s access to technologies in the field of quantum computing, as well as AI software.
That would follow Washington’s move earlier this month to expand the scope of US tech export controls targeted at chip makers on the mainland.

US weighs China tech restrictions on quantum computing and AI

For its part, Megvii has denied the US government’s accusations. Founded in 2011, Megvii reported a net loss of 1.86 billion yuan (US$256 million) in the first half of 2021, according to its prospectus.

The Cayman Islands-incorporated company, known for its Face++ facial-recognition software, was given the nod in September last year to list on the tech-heavy Star Market under the Shanghai Stock Exchange. Its initial public offering process has not yet started.
Megvii’s mainland Big Tech backers include computer maker Lenovo Group, e-commerce giant Alibaba Group Holding and its financial technology affiliate Ant Group. Alibaba owns the South China Morning Post.