Kneron secures $49M funding, aims to challenge Nvidia in AI chip industry

Kneron, a U.S.-based semiconductor startup, announced on Tuesday that it has secured fresh funding to accelerate the commercialization of its artificial intelligence (AI) chips. These chips are poised to rival Nvidia’s offerings in the market.

The company successfully raised an additional $49 million in funding, bringing its total funding round to a substantial $97 million.

Foxconn, the Taiwanese multinational electronics contract manufacturer responsible for assembling Apple’s iPhones, and Alltek, a communications technology company, were among the notable investors in this funding round.

Kneron aims to capitalize on the growing investor interest in AI and the underlying chip technology. This interest has been evident in Nvidia’s impressive 180% rally this year, as well as the recent successful initial public offering of semiconductor designer Arm in the U.S.

Nvidia is renowned for its high-performance graphics processing units (GPUs), which are primarily used in servers and data centers to handle the immense computing power required for training AI systems with vast amounts of data. However, many AI services currently operate from the cloud.

In contrast, Kneron specializes in designing AI chips that are integrated into consumer devices and cars, facilitating on-device AI capabilities. This approach offers benefits in terms of security and speed since AI applications no longer rely solely on cloud connectivity.

Kneron refers to its chips as neural processing units (NPUs), with its latest product, the KL730, geared towards supporting autonomous driving in vehicles.

Albert Liu, CEO of Kneron, explained that GPUs are expensive to utilize, creating potential demand for the more cost-effective NPUs.

Kneron stated in a press release that with this new funding, the company is specifically focused on expanding its efforts to enable AI to facilitate autonomous driving.

Kneron faces stiff competition from established giants like Qualcomm and MediaTek, as well as various startups, all striving to develop AI semiconductors.

Kneron has successfully attracted prominent backers, including Foxconn. Foxconn’s participation is particularly noteworthy as it signifies the company’s efforts to diversify beyond electronics assembly, foraying into electric cars and semiconductors.

Through their investment in Kneron, both companies will collaborate to expedite the deployment of advanced AI solutions in the automotive industry and other sectors. They will jointly develop an ultra-lightweight AI chip capable of running generative pre-trained (GPT) models directly from the cloud. GPT models are fundamental to various AI applications, such as ChatGPT.

However, Foxconn’s semiconductor ventures have encountered challenges. Last year, the company entered into a joint venture with Indian conglomerate Vedanta to establish a semiconductor and display production plant in India, with a total investment of $19.5 billion. Yet, Foxconn withdrew from this venture earlier this year, highlighting the difficulties faced by newcomers in the competitive microchip market.

Kneron’s chips are manufactured by TSMC, the world’s largest contract chip manufacturer. However, TSMC and the semiconductor industry as a whole have become entangled in the geopolitical tensions between the U.S. and China. Concerns persist that a potential Chinese invasion of Taiwan, where TSMC is headquartered, could disrupt the global supply chain for semiconductors.

To mitigate this risk, Kneron plans to establish a more geographically distributed production network in the U.S. and Europe starting next year.