Exclusive: AI chip startup D-Matrix raises $110 million with Microsoft backing

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The illustration shows AI (artificial intelligence) characters and a computer motherboard

The letters AI (artificial intelligence) are placed on a computer motherboard in this picture taken on June 23, 2023. REUTERS/Dado Ruvic/Illustration//File Photo Acquire Licensing Rights

Sept 6 (Reuters) – Silicon Valley-based artificial intelligence chip startup D-Matrix has raised $110 million from investors that include Microsoft Corp ( MSFT.O ) at a time when many chip companies are struggling to raise cash.

Nvidia’s ( NVDA.O ) dominant position in the AI ​​chip market has scared away potential investors in some startups due to its powerful combination of hardware and software, according to sources interviewed by Reuters. Nvidia declined to comment.

The Series B funding round was led by Singapore-based Temasek and included Palo Alto, California venture firm Playground Global and Microsoft.

“It’s capital that understands what it takes to build a semiconductor business,” CEO Sid Sheth told Reuters. “They’ve done it in the past. It’s capital that can stay with us for a long time.”

The Santa Clara company started the fundraising process about a year ago, Sheth said. The company did not disclose a valuation and has previously raised $44 million.

D-Matrix designs chips that are optimized to support power generative AI applications like ChatGPT. The company designs chips with digital “in-memory compute” that enables AI to run computer code more efficiently. The company’s chip technology uses less energy to crunch the data needed to spit out generative AI responses and is optimized for such tasks.

D-Matrix sets itself apart from Nvidia, as its technology focuses on the “inference” part of the AI ​​process and does not compete with Nvidia by making technology that trains large AI models.

“We solved the computer architecture,” said Playground partner Sasha Ostojic. “We’ve addressed low power requirements and data center needs – (we’ve) built a software stack to deliver the lowest latency in the industry by orders of magnitude.”

Microsoft is committed to evaluating the chip for its own use when it launches next year, Sheth told Reuters.

D-Matrix projects less than $10 million in revenue this year — largely from customers buying chips for evaluation. The business expects to generate $70 million to $75 million in annual revenue within two years, and break even, Sheth said.

Max A. Cherny reported in San Francisco; Edited by Stephen Coates

Our Standards: The Thomson Reuters Trust Principles.

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