AI Investment Momentum: Tenstorrent Secures $100M Funding for Next-Gen Chips from Hyundai and Samsung

0:00the ai chip company 10storrent just grabbed a hundred million dollar investment from samsung and also from Hyundai. So today on the podcast, we're going to be talking about where we see the AI chip industry, why we think this is important, and what specifically 10Store is planning on doing. So I think going from a bit of a general perspective, you know, the world of AI hardware is really, really hot right now. The appetite for these cutting edge chips is absolutely insane to the point where there isn't enough supply to meet the demand. We see this with shortages of NVIDIAs all over their chips really, but their A100s, their H100s, everything is sold out.

0:39People are trying to get their hands on these things. So analysts are forecasting some big numbers and startups are starting to kind of grapple with the industry giants and making sure that they can actually get the hardware that they need. But here's kind of the latest on what is happening in the industry. So according to McKinsey, by 2025, AI chips might account for up to 20 % of the massive$450 billion total semiconductor market. So to kind of put that into perspective, Insight partners have projected that sales of AI chips are going to soar by$83 billion, which is absolutely incredible. And this is going to happen by 2027.

1:20And that's from right now, $5.7 billion, or I guess that was actually back in 2018. But$5.7 billion 2018, up to$83 billion in 2027. That's an absolutely amazing, you know, over 10x in under 10 years. So I think this is going to be growing at a compound annual growth rate of 35%. This is nearly a tenfold jump compared to the forecasted growth rate for non AI chips. And I think this really shows you just how hot the whole AI industry is in general. So a big example of this right now, you know, as we mentioned today is 10storrent this is an ai hardware startup um it's led by the engineer the engineer jim keller um and they recently announced the raise of their this 100 million dollars in a convertible note funding round um and this was done by hyundai motor group and samsung catalyst fund so of this entire 100 million dollars 50 million dollars has come from hyundai's car making units Hyundai Motors and Kia, and they're planning to partner with TenStorrent essentially to craft CPUs and AI coprocessors specifically for future mobility vehicles and robots.

2:32To be honest, I always think this is a great play when startups are specifically partnering with enterprises to build out a specific product, right? Hyundai gives them$50 million, and they're going to be able to build chips that are going into Hyundai's cars. This is a win-win situation for both, and 10storrent gets the money they need and also the funds to kind of further their company. So I think the remaining$50 million was funded by Samsung Catalyst and other VCs like Fidelity Ventures, Eclipse Ventures, Epic Capital, and also Maverick Capital. So in the tech financing world, unlike equity, a convertible note essentially represents a short-term debt that later converts into equity upon a predetermined event.

3:12So in this case, 10 Torrance, 10 Storrance reasoning for like choosing debt over equity, that they have not actually released. So we're not exactly sure why they've done that. But the company's post money valuation was also something that they were asked about, but they've also not disclosed that. So we're not exactly sure how this changes the valuation of the company. And we're not exactly sure why they chose this specifically, But we do know that TenStorant described this as an upround. So allegedly, their valuation has grown. I feel like, I mean, I could be wrong here, but I feel like they typically will do this when it's an upround, but it's not a big upround, right?

3:55They don't really want to announce that, you know, over the last number of months or years, we've only grown this much. I think this is kind of a tricky time, right? Because if anyone raised money back in 2021, they really had to push and see a lot of growth in order to get any sort of increase in valuation to this year because we've just seen the markets hammered so much in early stage or just in any startups even in growth stage startups so previously they raised 200 million at a valuation that was over two billion dollars so i'll be curious to see whenever this does come out if they were able to push it much further than that so keller plans to utilize the new funds which is around you know 334 million dollars to date that's how much they raised total and he's planning on using the new funds for product development and enhancing their machine learning software roadmap.

4:44So they were actually founded back in 2016 by ex-AMD engineers and designers and they're actually based out of Toronto. So they have been a player in the AI processing market for quite some time. They have their hands in everything from processors and AI software solutions to IP around RISCV which is the open source instruction set architecture. and their whole kind of story of their company includes the development of Grayskull and which is an all-in-one system designed for AI model training and a shift in focus towards kind of licensing and services adapting to pressure from larger players is something that they've definitely had to deal with in this entire AI boom but last year they saw the launch of DeadCloud which was a service allowing developers to run AI models without buying hardware up front so more recently 10storant partnered with india's bodhi computing and lg to build its products into servers and also automotive devices so with this really ambitious move um they've made recently some big ones like opening a tokyo office and the question kind of you know is being asked by a lot of people which is can 10storant compete with the heavyweights like google amazon microsoft Nvidia and Nvidia briefly briefly right as we know touched a trillion dollar mark this year so obviously this is a big company and they're kind of you know they're putting their gloves on and getting in the ring with some of these really really big power players and you know the the question that we're asking is are they going to be able to compete with them because it would appear like typically this is a very tall task it's very hard to do but with the demand for GPUs and in for essentially just doing all this AI training, I think there is, you know, the possibility that they can compete, but other companies have faced challenges with AI chip makers.

6:36Graphcore reportedly lost a billion dollars in valuation. Habana Labs, which is the Intel owned firm, they laid off, you know, 10 % of their staff. So I think kind of adding to the entire intricate landscape of, you know, everything that's going on is a component shortage that's also happening for AI chips. And so I think the story of the AI chip market is far from over. I think time, as the wise always say, will reveal the victors in this kind of thriving and really highly competitive space. But for now, TenStorrent and others like it are really vying for their place at the forefront of innovation.

7:10I think they're seeking to reshape technology that we're seeing in our lives every day. And honestly, I think that this round of$100 million and specifically their partnerships with um you know kia and with hyundai to actually get this technology implemented into vehicles i think is going to make them a really formidable opponent i think that this gives them a lot of hope and a lot of chance to really fight in this industry that is growing very very rapidly