(Yicai) Dec. 4 -- SenseTime Group, a loss-making Chinese artificial intelligence startup, has completed a strategic restructuring begun in October that shifts its focus to generative AI.

The new structure, known as ‘1+X,’ has a core business (1) focused on AI cloud services and GenAI models, and ecosystem businesses (X), which include smart vehicles, home robotics, smart healthcare, and smart retail, Yicai learned from an internal memo that Chairman and Chief Executive Officer Xu Li sent to employees yesterday.

The core business will aim to achieve profitability and stable cash flow, while each of the ecosystem businesses, which will have their own independent CEOs, will cater to specific market needs, according to Xu.

In an internal memo in October, Xu said that research and development staff working on AI models were the main expense during the AI 1.0 era, whereas in the AI 2.0 era of GenAI models, the main cost has shifted to computational resources. The key to promoting the commercial application of GenAI will hinge on cutting the cost of producing and using large models, he said.

SenseTime’s net loss shrank 21 percent to CNY2.5 billion (USD339.2 million) in the first half of the year from a year ago, according to the Shanghai-based firm’s latest earnings report. Revenue rose 21 percent to CNY1.7 billion, with GenAI accounting for 60 percent of that after soaring 256 percent to CNY1.1 billion. 

Income from the intelligent vehicle business doubled to CNY168 million (USD230.8 million) in the period, while that from the traditional AI business sank 51 percent to CNY520 million. Overseas revenue jumped 40 percent to CNY314.5 million, accounting for nearly 19 percent of the total.

Founded in 2014, SenseTime develops facial recognition and autonomous driving software among other technologies. It became a public company in 2021.

Shares on SenseTime [HKG: 0020] ended unchanged at HKD1.50 (19 US cents) a share in Hong Kong today. The stock has gained 29 percent this year.

Editor: Futura Costaglione