US chip startups, long shunned in favor of internet bets, stir excitement again

Silicon Valley venture capitalists, long focused on software and internet companies, are again pouring money into the semiconductor industry, lured by the promise of a new generation of artificial-intelligence chips that could challenge incumbents like Intel Corp and Nvidia Corp.

The new wave of semiconductor innovation will do little to address the shortage of chips based on older technology that is currently plaguing the auto industry and others. The shortage stems from a confluence of factors as carmakers, which shut plants during the COVID-19 pandemic last year, compete against the sprawling consumer electronics industry for chip supplies.

The enthusiasm for chip startups is mostly a result of the need, by companies using AI software, for special-purpose processors that can efficiently run machine-learning algorithms requiring huge troves of data – the heart of the booming artificial-intelligence business.

Upstart chip-makers including SambaNova Systems, Groq, and Cerebras Systems all say they are making chips that can perform AI tasks better than processors from Nvidia, whose multipurpose graphics chip sets – originally made for video games -now dominate the AI market.

“How can a car be good at being fun to drive and good to take the kids and soccer balls to soccer practice and carry freight and…