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 negative impact of the Covid-19 crisis further complicates business for iFlyTek, which was added by the Trump administration to the US trade blacklist in October last year. The US action restricts its access to American hi-tech components like semiconductors and software.

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.