The layoffs are reportedly affecting some departments, with some employees being asked to leave within one week. The scale of the layoffs is said to be relatively large, with one employee from the Smart City and Business Group (SCG) estimating that their department has been reduced by 10-15%.

The compensation standard for this round of layoffs is reportedly “N (one month’s salary per year of service) + 2”, plus payment of September social security. For employees whose contracts are not renewed upon expiration and fresh graduates, the compensation is “N+1”.

In response to the layoffs, SenseTime said in a statement: “As a rapidly developing technology innovation company, SenseTime focuses its resources on strategic growth areas including general artificial intelligence. The company adjusts its strategies according to market changes and its own development status, optimizing organizational and talent structures to better meet business needs. Currently, the overall development of the company is good, and it will continue to attract outstanding talents from society and universities. SenseTime has full confidence in the long-term value and prospects of the group.”

SenseTime’s financial performance has been declining in recent years. The company’s total revenue in 2022 was RMB 3.809 billion (USD 520 million), a year-on-year decrease of 19%.

The net loss amounted to RMB 6.093 billion (USD 840 million), and the adjusted net loss was RMB 4.736 billion (USD 650 million).

The layoffs at SenseTime come at a time when the global AI industry is facing headwinds. The US-China chip war, rising inflation, and a potential recession are all weighing on the sector.

The layoffs at SenseTime also come amidst a race among local tech firms to develop and launch their own large language models. In April, SenseTime introduced SenseNova, a competitor to ChatGPT.

Other Chinese tech firms that are developing large language models include Baidu, Alibaba, and Tencent.