Investment Strategies of Nvidia’s Competitors in Startups: An Investigation

Over the past couple of years, Nvidia, the leading AI chipmaker, has significantly increased its investments in startups, gaining a more profound foothold in the AI industry. According to S&P Global and Crunchbase, the number of Nvidia’s startup investments spiked 280% year-over-year from 2022 to 2023, participating in around 46 deals last year through the company and its VC arm, Nvidia Ventures.

However, Nvidia isn’t the only one investing in this field. AMD, Arm, and Intel – Nvidia’s chief competitors in the AI chip market – have also been investing actively, trying to advance in markets such as the particularly competitive generative AI segment.

Our team at TechCrunch was intrigued to find out how these investments compared among the top AI chipmakers – Nvidia, AMD, Arm, and Intel. Therefore, we analyzed Crunchbase data, giving particular attention to the recent activity from each chipmaker and their VC divisions.

Among Nvidia’s competitors, Intel stands out with its largest startup investment operation thanks to Intel Capital, its established VC. Throughout 2023, Intel Capital infused over $350 million into its investments, backing companies like AI21 Labs, a competitor of OpenAI, video analytics platform Twelve Labs, app delivery network Fly.io, and workplace safety firm TuMeke.

According to Crunchbase data, Intel Capital’s participation in startup deals was recorded at 32 in 2023, a decrease from 47 in the previous year, 2022. Additionally, Intel made direct investments in two startups last year. This resulted in a total of 34 deals in 2023 and 47 in 2022.

Moreover, it appears that AI startups, which are significantly important to the current chip industry, constitute a minor part of Intel’s venture portfolio. Crunchbase reveals that Intel’s investments in software, IT, and enterprise SaaS companies dramatically surpass its dealings with AI startups.

However, this trend could shift as Intel aims to introduce new software products and services, such as GenAI-powered products, which will make its hardware more appealing for various AI applications. To illustrate, Intel established a spin-off company in January called Articul8 AI, to design GenAI solutions on Intel chipsets for enterprises in industries like aerospace, financial services, telecommunication, and semiconductors.

Comparatively, Arm may not be as active in investing in startups as Intel is. However, it has made several direct investments as well as deals via Deeptech Labs. This is a VC fund and accelerator co-founded by Arm, the University of Cambridge, Cambridge Innovation Capital, and Martlet Capital, and Arm’s main income is from licensing its chipset designs to customers.

During the past year, Arm made four direct investments in startups which included the microprocessor venture SiPearl, eSIM security company Kigen, Raspberry Pi, and the Raspberry Pi Foundation. There were also six additional investments through Deeptech Labs. The Deeptech Labs cash was targeted at startups such as Nu Quantum, a quantum networking start-up; RoboK, that is developing 3D sensing tech; and Perceptual Robotics, a company offering automated wind turbine inspection tech.

In total, Arm invested in 10 startups in 2023. This is a noticeable increase from 2022, when Arm invested in only four companies. These included the open-source hardware startup Arduino through a direct investment, and three investments via Deeptech Labs in Waku Robotics, Xapien, and SonicEdge.

Looking ahead, it is expected that AI will play a more prominent role in Arm’s future investments. This is based on the company’s forecast that this year will see a sharp increase in sales of its data center and consumer AI chips.

AMD, another player in this market, also has its investment arm called AMD Ventures. However, investment deals through AMD Ventures are not as frequent compared to other players.

Last year, AMD Ventures joined a series of investments, contributing to the Series A for Ethernovia, an innovative startup focused on constructing a series of ethernet chips and software, and making investments in funding rounds for Essential AI, a company dedicated to developing AI-driven software automation technology; Moreh, a firm dedicated to creating tools for maximizing AI models; and Hugging Face, with fellow investors Intel and Nvidia. The previous year saw AMD sign a solo deal with Radian Arc – a cloud gaming and AI IaaS platform and no other collaborations were initiated.

Four was the total number of deals AMD sanctioned in 2023, relatively modest compared to its competitors. However, 2024 might showcase a different tale. When solicited for a comment, AMD chose to share this statement from Matthew Hein, the corporate development chief strategy officer:

Last year saw an acceleration in AMD Ventures’ investment activities and 2024 aims to apply additional traction with a goal to hit the double digits in terms of investment level. Our investments span all stages, from supporting promising newcomers on the brink of market leadership to mature late-stage companies. The majority of our new investments in 2024 will be directed towards the AI ecosystem, involving AI platforms, generative model companies, and AI infrastructure services.

In addition to investments, 2024 will prove to be a significant year for AMD for other reasons. The company is gearing up for increased production of its MI300 AI chip, exclusively designed to accommodate AI workloads in data centers, and the launch of Ryzen 8040, targeting AI-accelerated processors for laptops.

So it’s true: Nvidia isn’t the only chipmaker investing in early ventures. However, it does seem to be surpassing the competition. In just the first three quarters of 2023, Nvidia fed nearly a billion dollars to “non-affiliated” firms, as per the former S&P Global report — this is a number that even Intel Capital found challenging to equal.

Achieving success in the AI chipmaking arena doesn’t necessarily require cultivating a strong startup ecosystem. However, it’s evident that Nvidia, one of the globe’s most valuable enterprises with control over approximately 95% of the AI chip market, is in it to win it — aiming to safeguard its superior position by dispersing its financial power broadly.

It’s safe to say that their competitors have a tough job ahead of them.

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