Chinese AI firm iFlyTek soars to Europe as US-China tensions escalate

Chinese AI firm iFlyTek is strategically pivoting toward European expansion amid escalating U.S.-China trade tensions. This move highlights how geopolitical friction is reshaping global AI business strategies, with Chinese tech companies increasingly looking to Europe as an alternative growth market while diversifying their supply chains to mitigate tariff impacts. The company’s European ambitions signal a broader trend of Chinese tech firms seeking to reduce dependence on North American markets.

The big picture: iFlyTek is actively expanding its European footprint to counter the impact of growing U.S.-China trade tensions.

• The company currently operates in France and Hungary, with plans to open a Paris office by 2026 and further expand into Spain and Italy next year.
• North America remains iFlyTek’s largest market outside China in terms of demand, making diversification increasingly crucial for the company’s growth strategy.

Why this matters: Recent U.S. trade actions directly threaten Chinese tech companies’ access to both American markets and components.

• President Trump announced 20% tariffs on previously untouched Chinese electronics categories, including smartphones, laptops, and smart speakers.
• These new restrictions follow the Biden administration’s earlier tariffs on Chinese computer chips, creating a challenging environment for companies like iFlyTek.

Key details: The Hefei-based company, valued at approximately $17 billion, is primarily known for its voice recognition technology.

• iFlyTek launched a new conversation-transcribing tablet at Barcelona’s Mobile World Congress, underscoring its “great importance to the European market,” according to a company spokesperson.
• Vice President Vincent Zhan indicated that iFlyTek’s expansion strategy prioritizes countries where it has established partnerships.

Adaptation strategy: Since being placed on a U.S. trade blacklist in 2019, iFlyTek has developed alternative supply chains for critical components.

• The company can no longer purchase Nvidia’s AI chips without specific U.S. government approval, forcing it to use Huawei-made chips for its AI model development.
• “It is a challenge for us, but in the last two years, a lot of Chinese companies have started manufacturing AI chips,” Zhan noted, highlighting the emerging domestic chip ecosystem in China.