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By Bruce Sussman
Tue | Oct 8, 2019 | 10:01 AM PDT

They are some of China's technology industry darlings and they represent the country's stated ambitions of leading the world in Artificial Intelligence.

Now, the U.S. Department of Commerce is adding eight Chinese tech companies, including AI startups, to the dreaded "Entity List," which requires U.S. companies to get permission to do business with those entities.

Why Chinese AI companies are added to the U.S. blacklist

The Commerce Department cited human rights violations related to technology that allows for mass surveillance and persecution of minority groups within China.

Business Insider sums up the dollars and cents of it quite nicely:

"On the list were eight tech companies, including three of China's biggest AI startups—SenseTime, Megvii, and Yitu. SenseTime racked up a valuation of $4.5 billion last year, making it the world's highest-valued AI startup, TechCrunch reported at the time. Megvii raised $750 million in May of this year, and filed for an IPO in Hong Kong in August. Yitu Technologies was most recently valued at just under $2.4 billion and was reported to be in the process of gearing up for an IPO as recently as last month."

And Bloomberg adds some relevant details:

"Among those singled out for sweeping American export restrictions were SenseTime Group Ltd., the world's largest AI startup, and Megvii Technology Ltd.— two giant enterprises Beijing is counting on to spearhead advances into a revolutionary technology, aided by billions of dollars in foreign backing.

Leading players like SenseTime and Megvii, already having trouble securing financing during an economic downturn, had considered international forays to sustain a sizzling pace of growth. The Commerce Department's action threatens to derail that effort while spooking the business, supply and research partners needed over the longer term. Nvidia Corp., for one, is a key supplier to both AI firms."

In all, 28 organizations were added to the "Entity List," including many of China's "Public Security Bureaus" which are directly carrying out mass surveillance in their areas of jurisdiction.

You can read the document for yourself: China Entity List Update

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