SenseTime Group Inc., a leading Chinese artificial intelligence (AI) company, is downsizing its office space in Singapore, signaling a retreat from its ambitious expansion plans. This move comes as the company faces intensifying competition in the rapidly evolving AI landscape, particularly in the post-ChatGPT era.
SenseTime is relocating from its current premium location in Frasers Tower, a prominent downtown skyscraper, to a smaller office in a less central and more cost-effective neighborhood. The company is reportedly relinquishing approximately 11,000 square feet (1,022 square meters) of prime office space. This downsizing contrasts sharply with the expansion strategies of other tech giants like ByteDance Ltd., which are increasing their global presence. SenseTime’s decision highlights the challenges the company faces in navigating a crowded AI market and the impact of losing Alibaba Group Holding Ltd. as a financial backer in 2023.
This retrenchment also reflects the shifting dynamics of Singapore’s prime office market. The market has heavily relied on expansion by well-funded Chinese companies in recent years. However, this trend is softening as businesses implement cost-cutting measures and the supply of real estate increases. Although prime office vacancies in Singapore’s central business district decreased to 6.9% in the final quarter of 2024, this followed a surge to their highest levels in over two years during the preceding three months, according to data from Jones Lang LaSalle Inc.
Just a few years ago, SenseTime was at the forefront of companies expanding in Singapore, capitalizing on the city-state’s quicker emergence from Covid-19 restrictions compared to China. In 2021, SenseTime executives announced the establishment of a local AI innovation hub and projected tripling their staff to around 300 within three years, according to the Business Times. This ambitious vision now stands in stark contrast to the company’s current downsizing efforts.
SenseTime, one of the first Chinese companies to receive approval for generative AI services in 2024, is currently undergoing a restructuring process to prioritize this emerging field. However, the company faces formidable competition from established industry leaders and a new wave of well-funded startups like Moonshot AI and Zhipu.
While SenseTime was once recognized for its pioneering work in areas such as facial recognition, its growth trajectory slowed after being blacklisted by the US in 2019 over alleged human rights abuses in Xinjiang. These allegations, which SenseTime denies, led to restricted access to capital and crucial US components. Subsequent limitations on the sale of advanced AI chips and chipmaking equipment to Chinese companies further compounded these challenges.
In conclusion, SenseTime’s downsizing in Singapore reflects the challenges the company faces amidst increasing competition in the AI sector and broader geopolitical and economic headwinds. The move underscores the dynamic nature of the AI industry and the difficulties even established players face in maintaining momentum. The changing landscape of Singapore’s prime office market further emphasizes the complexities of global business operations in the current economic climate.
