House committee takes aim at U.S. venture capital firms for investments in Chinese A.I.

The House Select Committee connected the Chinese Communist Party sent letters to 4 abstracted U.S. task superior firms, including Qualcomm's task arm, expressing "serious concern" astir their investments successful Chinese tech startups.

The letters, which were made nationalist connected Wednesday, were sent to GGV Capital, GST Ventures, Qualcomm Ventures, and Walden International. They were written by and Wisconsin Republican Mike Gallagher and Illinois Democrat Raja Krishnamoorthi, the apical 2 members connected the committee.

Of peculiar interest to the lawmakers are investments successful artificial intelligence, chipmakers and quantum computing companies successful China. They besides noted that immoderate of the companies to person U.S. wealth person been linked to the profiling and tracking of Uyghur taste minorities successful China.

"Like AI, the home improvement of semiconductors is simply a apical precedence of the Chinese Communist Party," the missive says. "Semiconductors are indispensable for artificial intelligence, quantum computing, and different precocious dual usage technology."

Representatives from the 4 task firms who received the letters did not instantly respond to requests for comment.

The outreach represents the latest bipartisan effort by politicians to measurement up unit connected U.S. investments successful China arsenic hostility swells betwixt the world's 2 largest economies and nationalist information concerns escalate. U.S. Treasury Secretary Janet Yellen traveled to China earlier this period arsenic portion of a program to stabilize relations with China. Secretary of State Antony Blinken visited successful June.

In their letter, Gallagher and Krishnamoorthi linked dozens of peculiar investments to quality rights violations and efforts to heighten China's military, which runs antagonistic to American interests.

Qualcomm Ventures, for example, made 13 investments successful Chinese A.I. companies from 2015 to 2021, according to the letter. One investment, successful the present publicly-traded SenseTime, was linked by a New York Times report to Chinese tracking and profiling of the Uyghurs.

In summation to Qualcomm, PitchBook information shows that U.S. firms Tiger Global Management and Silver Lake, which were not mentioned successful the letter, invested successful SenseTime anterior to its 2021 IPO.

Tiger Global did not instantly instrumentality a petition for comment.

Qualcomm's concern successful Denglin Technology, an evident competitor, besides faces Congressional scrutiny. Qualcomm was 1 of Denglin's earliest backers, according to PitchBook, and invested successful an further 2022 backing round.

The steadfast with the astir perchance problematic investments, according to the missive is GGV Capital, which has offices successful Silicon Valley, San Francisco, Shanghai, Beijing and Singapore. The missive identified 43 antithetic investments successful Chinese AI companies from 2015 to 2021, much than immoderate different identified by autarkic researchers astatine Georgetown's Center for Security and Emerging Technology.

GGV has $9.2 cardinal successful assets nether management, and established operations connected the crushed successful China successful 2005. Even earlier that, it invested successful Chinese e-commerce elephantine Alibaba, and subsequently backed TikTok genitor ByteDance and ride-hailing institution Didi.

Gallagher and Krishnamoorthi place GGV's concern successful Megvii, a Beijing-based facial designation bundle provider, arsenic a constituent of concern. The institution "actively supports the surveillance of Uyghurs," the missive says.

Megvii is backed by a fig of large investors, including Alibaba, Foxconn and the Macquarie Group. GGV invested successful Megvii successful 2019 alongside Abu Dhabi's sovereign wealthiness money successful a woody that valued the institution astatine astir $4 billion.

Walden, a smaller firm, was identified arsenic a peculiarly important backer of Chinese AI companies. The missive said that from 2015 to 2021, astatine slightest 39% of the firm's AI deals were successful that sector, including 1 concern successful a present blacklisted institution called Intellifusion.

Intellifusion has since gone nationalist and has a marketplace headdress of 22 cardinal Chinese yuan, oregon astir $3 billion.

Regarding GSR Ventures, the missive said the steadfast "was among the apical U.S.-located investors successful PRC artificial quality companies betwixt 2015 and 2021, according to a caller study by the Center for Security and Emerging Technology." The lawmakers cited 33 chiseled investments successful the six-year period, including Horizon Robotics, which was past privately valued astatine $5 cardinal successful 2021.

The letters beforehand Gallagher's propulsion for controls connected U.S. wealth successful cardinal technologies successful China.

After gathering with Silicon Valley executives successful April, Gallagher told CNBC successful an interview that helium "emerged from that time cautiously optimistic that we could enactment successful spot immoderate sensible controls connected American superior flowing to China that would let america to not money our ain demolition oregon money our ain nonaccomplishment successful the large AI race." 

He said astatine the clip helium recovered determination was "broad support" among task capitalists and others to support U.S. plus managers from investing successful Chinese AI firms.

The U.S. Commerce Department has besides considered steps to guarantee U.S. technologies can't beryllium overly leveraged by China to beforehand its ain AI efforts. The Wall Street Journal reported past period that the bureau was weighing further limits connected precocious chips utilized for AI that could beryllium exported to China.

Pressure has been gathering connected VC firms with important investments successful China, successful portion owed to concerns implicit intelligence spot theft wrong exertion and a budding AI race. Last month, legendary VC steadfast Sequoia Capital said it would split its planetary business into 3 parts, with Neil Shen helming its almighty Sequoia China unit.

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