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Published - July 21st, 2023 @ 10:50 AM (GMT+2)

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Emerging tech firms are poised to benefit from the skyrocketing demand for specialist AI chips. This comes amid a shortfall in Nvidia's (NASDAQ:NVDA) product supply, creating an opportunity for new entrants to challenge the supremacy of the world’s highest-valued semiconductor firm.
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A significant boost in Nvidia’s sales forecast, fueled by AI, propelled its market capitalisation past the $1tn mark in May. However, the demand for its latest chips is predicted to exceed supply well into the forthcoming year.

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Rising AI Firms Seeking to Fill the Gap
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SambaNova, Graphcore and Tenstorrent are among the companies looking to offer alternatives. These companies have collectively attracted over $3bn in funding in recent years, as per Dealroom.co, a tracker of private tech investments.

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Despite this, most have yet to make substantial headway against Nvidia. The firm's A100 and H100 chips have become the top choice for companies such as OpenAI and Inflection AI, which handle enormous data volumes to develop their AI services.

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Cerebras Steps Up With a Major Deal
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Silicon Valley-based AI chip start-up Cerebras recently announced its intention to construct and manage a supercomputer network for Abu Dhabi tech group G42. Since its establishment in 2016, Cerebras has raised $730mn. If specific benchmarks are met in the coming months, the G42 contract could exceed $100mn, stated Cerebras CEO Andrew Feldman.

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The agreement with G42, which operates in various sectors such as healthcare, energy, and cloud computing, is among the most substantial contracts for an Nvidia rival. G42 intends to leverage the computing resources while selling "excess capacity" to other clients through its cloud-computing arm and Cerebras.

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Nvidia Still Preferred Despite Claims
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Despite some start-ups claiming superior performance to certain Nvidia products, AI researchers and companies commercializing their research continue to favour Nvidia’s technology.

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Nvidia's Deep-rooted Market Influence
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Jakub Zavrel, whose company Zeta Alpha, tracks processor references in AI research papers for Air Street Capital's State of AI report, noted that none of these start-ups are generating significant revenue. In Zavrel’s view, AMD's latest chips are more likely to seize Nvidia's market share than any private rivals. Intel, after acquiring AI accelerator start-up Habana Labs for $2bn in 2019, is also gearing up to challenge Nvidia.

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AI chip start-ups are faced with formidable tasks. Some, like Celestial AI, have shifted focus from directly competing with Nvidia to complementing their technology. Fabrizio Del Maffeo, CEO of Netherlands-based Axelera AI, is developing AI chips for cars, medical devices and security cameras, instead of the cloud and data centres where Nvidia’s most powerful chips are in high demand.

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