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The AI chip startup explosion is already here

The AI chip startup explosion is already here
From TechCrunch - December 24, 2017

All eyes may have been on Nvidia this year as its stock exploded higher thanks to an enormous amount of demand across all fronts: gaming, an increased interest in data centers, and its major potential applications in AI.

But while Nvidias stock price and that chart may have been one of the more eye-popping parts of 2017, a year when AI continued its march toward being omnipresent in technology, something a little more subtle was happening in the AI world that may have even deeper ramifications.

This year, an array of startups that are all working on their own variations of hardware that will power future devices built on top of AI received enormous amounts of funding. Some of these startups have nowhere near a massive install base (or have yet to ship a product) but already appear to have no trouble raising financing.

Looking to optimize inference and machine trainingtwo key parts of processes like image and speech recognitionstartups have sought to find ways to pick away at these processes in ways that will make them faster, more power-efficient, and generally better suited for the next generation of artificial intelligence-powered devices. Instead of the traditional computational architecture weve become accustomed to with CPUs, the GPU has become one of the go-to pieces of silicon for processing the rapid-fire calculations required for AI processes. And these startups think they can do that even better.

Before we get to the class of startups, lets quickly review the aforementioned Nvidia chart, just to get a sense of the scale of whats happening here. Even with the blip at the end of the year, shares of Nvidia are up nearly 80 percent heading into 2018:

So, naturally, wed probably see a whole class of startups that are looking to pick away at Nvidias potential vulnerabilities in the AI market. Investors, too, would also take notice of this.

We first broke the news that CerebrasSystems had picked up funding from Benchmark Capital in December last yearwhen it raised around $25 million. At the time, it seemed like the AI chip industry was not quite as obvious as it was todaythough, as the year went on, Nvidias dominance of the GPU market was a clear indicator that this would be a booming space. Then Forbes reported in August this year that the company was valued at nearly $900 million. Obviously, there was something here.

Graphcore, too, made some noise this year. It announced a new $50 million financing round in November this year led by Sequoia Capital, shortly after a $30 million financing round in July led by Atomico. Graphcore still, like Cerebras Systems, doesnt have a splashy product on the market yet like Nvidia. And yet this startup was able to raise $80 million in a year, though hardware startups face many more challenges than ones built on the back of software.

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