iFlytek Redirects $337 Million to Boost Domestic AI Computing Amid U.S. Sanctions
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iFlyteck announced the change to its private placement plan in a filing on Sept. 29. Photo: VCG
Chinese AI giant iFlytek Co. Ltd. is reallocating 2.4 billion yuan ($337 million) from a planned fundraiser to rent domestic AI computing power, a strategic shift that deepens its reliance on homegrown technology amid U.S. sanctions.
The company announced the change to its private placement plan in a filing on Sept. 29. The funds were originally earmarked for supplementing working capital. The total amount to be raised remains unchanged at 4 billion yuan, with 800 million yuan still set aside for developing its large language model (LLM) for education and another 800 million yuan for working capital.
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- iFlytek is reallocating 2.4 billion yuan ($330 million) to lease domestic AI computing power, shifting away from U.S. technology amid sanctions.
- Collaborating with Huawei and other local firms, iFlytek uses the Feixing-1 platform, claiming 90% of Nvidia A100’s performance, and announced Spark V4.0 and Feixing-2.
- First half 2024 revenue grew 17% to 10.91 billion yuan; net loss shrank to 364 million yuan; smart education is its largest business segment.
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Who’s Who
- iFlytek Co.Ltd.
- iFlytek Co. Ltd. is a Chinese AI giant reallocating 2.4 billion yuan (approximately $330 million) to lease domestic AI computing power. This strategic move highlights its intensified reliance on homegrown technology and a shift away from U.S. technology due to sanctions, particularly from acquiring Nvidia chips. The company has deeply partnered with Huawei Technologies Co. Ltd. to develop a self-reliant AI ecosystem.
- Huawei Technologies Co.Ltd.
- Huawei Technologies Co.Ltd. is a key partner for iFlytek, especially in light of U.S. sanctions. They collaborate on the Ascend AI computing platform and jointly launched the "Feixing-1" computing platform. iFlytek's strategic agreement with Huawei aims to explore platforms with computing power equivalent to over 30,000 Nvidia A100 chips.
- Hygon Information Technology Co.Ltd.
- Hygon Information Technology Co.Ltd. is a domestic Chinese supplier that collaborates with iFlytek, a leading Chinese AI company. This partnership is part of a broader trend among Chinese tech firms to build a self-reliant hardware and software ecosystem for artificial intelligence, especially following increased U.S. sanctions.
- Cambricon Technologies Corp.Ltd.
- Cambricon Technologies Corp.Ltd. is a Chinese domestic supplier of AI chips. iFlytek collaborates with Cambricon, among other local players like Huawei and Hygon Information Technology, to build a self-reliant AI ecosystem in China amidst U.S. sanctions.
- Nvidia Corp.
- Due to US sanctions, Chinese AI giant iFlytek had to abandon Nvidia Corp.'s industry-leading chips. This forced iFlytek to commit to domestic AI chips, partnering with local players like Huawei Technologies Co., Ltd. The "Feixing-1" computing platform, powered by Huawei's Ascend 910B chips, is claimed to achieve 90% of the performance of Nvidia's A100 processor.
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What Happened When
- October 2022：
- U.S. tightened sanctions against iFlytek, leading the company to fully commit to domestic AI chips.
- Full year 2023：
- iFlytek recorded revenue of 23.34 billion yuan and a net profit of 188 million yuan after deducting nonrecurring items.
- October 2023：
- iFlytek and Huawei jointly launched the 'Feixing-1' computing platform.
- January 2024：
- iFlytek released Spark V3.5, the first LLM trained entirely on the Feixing-1 platform.
- First half of 2024：
- iFlytek’s revenue grew 17% year-on-year to 10.91 billion yuan, with a narrowed net loss and reduced net cash outflow.
- August 2024：
- During an earnings call, iFlytek executives stated they would not significantly increase capital expenditure on their own computing power in the coming years.
- September 29, 2024：
- iFlytek announced in a filing the strategic shift to allocate 2.4 billion yuan from raised funds to lease domestic AI computing power in 2024.
- October 2024：
- iFlytek announced its new Spark V4.0 Turbo model and launched the next-generation 'Feixing-2' platform.
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