Amazon founder Jeff Bezos would have backed a $700 million funding round for Tenstorrent, an AI chip startup, valuing the company at $2.6 billion. The investment, led by South Korean firms AFW Partners and Samsung Securities, positions Tenstorrent as a serious competitor to Nvidia, which is currently the dominant player in the AI chip market. Other investors include LG Electronics, Fidelity and Hyundai Motor Group.
Tenstorrent, headquartered in Santa Clara, California, plans to use the funds to expand its engineering team, strengthen its global supply chain and build AI training servers to showcase its technology. The startup aims to develop chips that provide more cost-effective and energy-efficient solutions for AI development, leveraging open source technology and avoiding the costly high-bandwidth memory (HBM) favored by Nvidia.
“You can’t beat Nvidia if you use HBM, because Nvidia buys the most HBM and has a cost advantage. But they will never be able to drive down prices the way HBM is integrated into their products and their sockets,” said Jim Keller, CEO of Tenstorrent.
Unlike Nvidia’s proprietary ecosystem, Tenstorrent focuses on interoperability with other technology providers. He makes the case for the open-standard RISC-V processor architecture, which Keller says attracts engineers and fosters innovation.
Tenstorrent’s approach reflects a growing trend in the AI chip sector, where startups are challenging Nvidia’s dominance by offering alternatives tailored to specific needs. While Nvidia generates tens of billions in data center revenue each quarter, Tenstorrent has secured nearly $150 million in contracts, a modest figure but a sign of its potential.
The company aims to launch a new AI processor every two years. Its first chips were manufactured by GlobalFoundries, and future iterations are planned by Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung. Tenstorrent is also exploring 2-nanometer chip designs, aligning with production timelines from TSMC and Samsung and Japan’s Rapidus Corp., which is targeting 2nm production by 2027.
As Tenstorrent grows, it faces the challenge of proving its technology in a market where Nvidia’s dominance remains unmatched. However, thanks to the support of leading investors and an innovative open source approach, it is positioning itself as a formidable challenger in the AI chip landscape.