The Intel-controlled venture capital fund is one of the most active foreign investors in Chinese startups related to the field of artificial intelligence and semiconductor components. Through this structure, Intel owns shares in 43 young Chinese technology companies, and American officials are puzzled by this circumstance.
Image Source: Intel
As the Financial Times explains, the Intel Capital venture fund began its activities in the nineties of the last century, and since then has invested in more than 120 Chinese companies. Even last year, such activity did not stop, although against the backdrop of increasing anti-Chinese sanctions, many American institutional investors began to curtail their cooperation with Chinese companies. Last year, Intel Capital invested $91 million in Shanghai-based optical equipment developer North Ocean Photonics. In February of this year, $20 million was spent to support the developer of a cloud platform for 5G networks, AI-Link from Shenzhen. In total, Intel currently supports 16 Chinese startups that work in the field of artificial intelligence, as well as 15 startups that develop semiconductor components. Since its inception, Intel Capital has invested more than $20 billion in young companies around the world.
Last month, US authorities proposed limiting the investment activity of American companies in those areas of the Chinese economy that would contribute to the development of dual-use technologies. Artificial intelligence, quantum computing and semiconductor components are included in this list, but its final version will be published this year. According to sources familiar with the situation, it was the activities of the Intel venture fund in China that became the main incentive for the US authorities to come up with new restrictions. However, since January 2023, Intel has concluded only three investment deals in China, so we can talk about a decrease in its activity in this area.
Although Qualcomm also has a venture capital arm, its activity in China is noticeably inferior to Intel. If we consider all the American venture funds that have shown themselves in China, then to date it has invested $1.9 billion in the field of artificial intelligence, as well as $1.2 billion in the semiconductor components segment. True, American funds Sequoia Capital and GGV Capital got rid of their Chinese divisions last year amid increasing political pressure. Since 2015, Intel Capital in China has invested in a number of transactions, the total value of which is estimated at $1.4 billion, although Intel’s share in them is noticeably lower than this amount. In 2015, Intel’s venture capital fund invested a total of $67 million in Chinese startups. By 2014, the company had spent $670 million on such needs, and the fund’s activities covered more than 110 young Chinese companies.
American officials were able to establish that between 2015 and 2021, Intel Capital took part in financing the activities of several Chinese companies related to artificial intelligence, concluding a total of 11 transactions. According to Intel itself, their number did not exceed four. Under their terms, in some cases, Intel received a seat on the board of directors of relevant Chinese companies. In one case, Intel provided support to a Chinese company that was later directly sanctioned by the United States. We are talking about iFlytek, which is developing speech recognition technology. From 2002 to 2005, Intel owned a 3% stake in this company, but the latter came under sanctions only in 2019, when the American processor manufacturer had already broken all ties with it. According to industry insiders, Intel initially wanted to keep up with competitors by investing in promising third-party developments both in US-friendly countries around the world and in unfriendly ones.