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14 Nov 2023
Chinese lidar firm's American CFO labels recent litigation tactics 'xenophobic' and 'repugnant'.
A senior executive at China-based lidar company Hesai Technology has attacked the patent litigation case against the firm brought by US rival Ouster earlier this year as “desperate”, and “un-American”.
Following last month’s decision by an International Trade Commission (ITC) judge to terminate the ITC’s own investigation into the case, Hesai CFO Louis Hsieh told an investor conference call discussing the firm’s latest financial results:
“As an American, I find Ouster’s desperate ‘national origin based’ xenophobic tactics of attacking Hesai with baseless, stereotypical allegations and innuendo repugnant and antithetical to American principles and values.
“In my opinion, such tactics and behavior should not be tolerated. Simply put, I believe Ouster’s smear campaign against Hesai is downright un-American.”
Hsieh went on to accuse Ouster of looking to exploit broader tensions between the US and China with a “smear campaign” and “desperate” lobbying tactics intended to portray Hesai as working with the Chinese military on intelligence gathering.
“[These] claims are deplorable and contemptuous,” said the CFO, also claiming that Ouster’s technology was simply outperformed by Hesai’s, and that the California-based rival was losing market share as a result.
‘Baseless' political lobbying
Following the ITC ruling in October, Hesai - which in February listed on the Nasdaq via a $190 million initial public offering - accused Ouster of spending $800,000 on political lobbying efforts as a “last resort”, adding:
“Specifically, Ouster lobbyists are making the rounds in the media and in Washington, DC, falsely alleging that Hesai lidars potentially pose a data security and privacy risk, are a national security risk to the US, and that Hesai is controlled by the Chinese government. These baseless allegations are patently false.
“Hesai lidars are designed for civilian use only. All of our products are classified as ‘EAR99’, meaning they are not suitable for military applications. To further guarantee our products' civilian use, our sales agreements with new customers prohibit the sale of Hesai lidars to the military. We are not aware of any such military uses of Hesai lidars.”
The company also said that it had received “zero” investment from any government or sovereign wealth funds, adding: “The Chinese government and the Chinese Communist Party have had absolutely no intervention in Hesai’s operations or management.”
While the ITC case was closed in light of an existing licensing agreement between Hesai and Velodyne, which is now part of Ouster, the US company had also filed against its Chinese rival for patent infringement in the US District Court of Delaware - and Ouster says it will continue with that separate action.
Great Wall design win
In the meantime, Hesai highlighted a new supply agreement with Great Wall Motor (GWM) - one of China’s largest auto makers - as it posted sales of RMB446 million ($61 million) in the three months ending September 30 - up 34 per cent on the same period last year.
Despite that increase, Hesai’s operating losses widened more than 60 per cent year-on-year as the firm worked to transition production to its new facility in Hangzhou, and completed construction of another research and development and manufacturing site located in Shanghai.
That investment should enable the company to meet what is expected to be a significant step up in customer volume requirements next year, with Hsieh and Hesai’s CEO Yifan “David” Li telling investors that they now expect to ship some 500,000 lidar units in 2024 - up from 220,000 this year.
“It is noteworthy that among these recent design wins, several of them have prior engagements with our industry peers,” Li said. “Their choice to switch to our lidar products for certain existing or future models is a strong endorsement of the superior performance of our high-quality lidar products and our proven track record of timely deliveries.”
GWM is set to deploy Hesai’s “AT128” sensor on board series production vehicles, with mass production and delivery slated to begin in 2024.
Cost-cutting efforts
Over at Ouster, which reported its latest financial figures a few days before Hesai, CEO Angus Pacala and colleagues made no mention of the ITC decision, instead focusing on their efforts to cut operating expenses dramatically following the Velodyne merger.
Citing annualized cost savings of $120 million, Pacala also revealed quarterly sales revenues of $22 million, with that figure expected to tick up to around $24 million in the closing quarter of 2023.
Despite the cost savings that latest sales figure still translated to an operating loss of $36 million, while Ouster has racked up a net loss of more than $335 million so far this year, including write-downs related to the Velodyne deal.
Highlighting opportunities for lidar sensors in fork-lift truck applications, the CEO added: “We believe 2024 will represent the culmination of multiple years of developing the end-state architecture of automotive lidar with [our] fully solid-state DF series.”
• Elsewhere in the lidar business, AEye has also been restructuring. It posted an operating loss of just over $17 million on near-negligible sales, with CEO Matt Fisch stating that the firm was focused on ensuring it was ready for the commercial transition of lidar within the automotive market.
That preparation now includes what the company believes to be the only 1550 nm high-performance lidar capable of in-cabin integration behind a windscreen. Boasting a detection range of 275 meters at 10% reflectivity, the "4Sight Flex" is said to be half the size of AEye’s first-generation design, while offering a 40 per cent reduction in power consumption.
Another Silicon Valley rival, in the form of Cepton, posted an operating loss of $12 million on sales of $3.8 million, with CEO and co-founder Jun Pei saying that despite record shipments for automotive use, wider deployment had been pushed back as a result of car industry “headwinds” and delayed vehicle launches.
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