SenseTime wins deals in Saudi Arabia in return for investment in domestic firms

SenseTime and other technology companies based in China are investing in local firms in Saudi Arabia, often in the form of joint ventures, to qualify for contracts in the country worth hundreds of millions of dollars, the Financial Times reports.

The facial recognition developer has also won a contract with Saudi Arabia’s megacity project, Neom.

A joint venture formed in 2022 was formed by SenseTime with $207M in support from the Saudi Company for Artificial Intelligence (SCAI) to develop AI applications in the Middle East. The SCAI is owned by the kingdom’s sovereign wealth fund. The terms of the deal stipulate that if the JV is not acquired or does not hold an initial public offering within seven years, SenseTime must buy out the SCAI’s share.

The Times describes a situation in which countries in the Middle East want to establish AI capabilities, and are offering large contracts in return for upgrades in their domestic skill-sets. A venture capitalist told the publication that Chinese firms are more open to transferring intellectual property than their European and U.S. counterparts.

The sought capabilities include Arabic heavy large language models, and SenseTime has just unveiled its SenseNova 4.0 LLM. SenseNova beats GPT-3.5 in overall performance, according to the announcement, and is used to power the new Office Raccoon data analysis application.

Chinese investors say Saudi contributions to venture funds are now typically reserved for projects in which 30 percent of spending is within the kingdom.

SenseTime apparently satisfied those requirements with a joint venture with PIF. Their JV has signed a memorandum of understanding with educational program Mawhiba to provide online training and “an AI-centric enrichment program for Mawhiba students,” according to a LinkedIn post from SenseTime MEA.

Saudi Arabia’s investment criteria is reminiscent of the Chinese policy of requiring local partners for foreign companies bidding on domestic contracts.

Article Topics

AI  |  China  |  investment  |  research and development  |  Saudi Arabia  |  SenseTime  |  smart cities