Amazon (AMZN, Financials) founder Jeff Bezos and Samsung Securities have invested $700 million in Santa Clara-based AI chip firm Tenstorrent, which competes with Nvidia (NVDA, Financials). The funding values the company at approximately $2.6 billion, Bloomberg said Monday.
Led by South Korea’s AFW Partners and Samsung Securities, the financing round comprised LG Electronics, Fidelity, and Bezos Expeditions, Bezos’s own venture capital firm. Founder Jim Keller said the money will grow Tenstorrent’s technical staff, strengthen its worldwide supply chain, and create AI training servers to highlight its technologies.
Tenstorrent is concentrating on low-cost, open-source substitutes for high-bandwidth memory developed by Nvidia. You can’t beat Nvidia if you use HBM, because Nvidia buys the most HBM and has a cost advantage, Keller said. But they’ll never be able to bring the price down the way HBM is built into their products and their sockets.
Tenstorrent intends to introduce new AI processors every two years, unlike Nvidia, which replaces its AI chips yearly. The business is also using open-source architecture challenging proprietary systems like those from Arm Holdings Plc. (ARM, Financials) by utilizing RISC-V.
Tenstorrent has signed client contracts valued around $150 million so far, much less than the data center income of Nvidia, which comes in tens of billions of dollars annually.
Positive comments from Korean firms working with Tenstorrent, including LG Electronics, were reported by AFW Partners. With talks on advanced 2-nanometer production including Japan’s Rapidus Corp., manufacturing partners include GlobalFoundries (GFS, Financials), Taiwan Semiconductor Manufacturing Co. (TSM, Financials), and Samsung Electronics Co. (SSNLF, Financials).
Export Development Canada, Healthcare of Ontario Pension Plan, Hyundai Motor Group, and Baillie Gifford (Trades, Portfolio) are among the funders in the series.
The money emphasizes the increasing competitiveness in the AI chip business as new firms like Tenstorrent confront industry stalwarts such as Nvidia.
This article first appeared on GuruFocus.
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