Specialized chipmakers are concentrating in the US and China

(Source: Max Pixel)

As we’ve discussed on this blog before, some areas of the artificial intelligence race are a fairly level playing field for startups and technology incumbents alike. One of the most promising areas for startups is in semiconductors. It seems counter-intuitive given that giants like Intel and Qualcomm appear to have their respective market sectors locked up.

However, dedicated chips for specific use case have turned into big business. The New York Times detailed in an article this week how this is helping startups. The article concluded that, “Everyone is starting from about the same place: the beginning of a new market.”

The biggest winners in this area are likely going to be the U.S., China and Taiwan. Taiwan and the U.S. (Silicon Valley, specifically) are already hotbeds of semiconductor innovation, so much of the new industry activity springs up in these places by virtue of economic clustering.

More recently, China has been pouring money into the semiconductor market. The market there isn’t nearly as sophisticated and it’s years away from catching up with the competition, but the investment is having an impact.

China is currently focusing on its investment on manufacturing. Shaojun Wei, Tsinghua University’s dean of the Department of Micro- and Nano-Electronics, estimates 60 percent of the funding goes to manufacturing, 30 percent to fabless development and 10 percent to equipment and material, according to EE Times.

Most chipmakers are fabless, though, and that’s the sector in which much of the innovation in dedicated AI chips is happening. Startups can’t match the manufacturing prowess of industry giants like Intel ad Samsung. Those are the companies duking it out for the next generation’s smallest chipset. Not even China is immune to this, in spite of the country’s investment habits.

The Chinese chip startups mentioned in the New York Times do not have the capacity to manufacture their own chips. These companies include Horizon Robotics, Cambricon and DeePhi, which has said its products are manufactured in Taiwan.

These companies are all impressive enough to be attracting some substantial investment, though. Intel Capital led a $100 million funding round for Horizon Robotics last year. Cambricon has also raised $100 million and DeePhi has raised $40 million from investors that include Samsung Electronics and MediaTek, according to data from Crunchbase.

One of the big areas for dedicated AI chips today is automated driving. China and the U.S. are two of the biggest markets for research in this area. Companies like Google and Uber have struck deals with cities in the U.S. to test out automated driving technology, so the research and development race is already heating up there.

Things may start to look similar in China soon enough. The Beijing Municipal Transport Commission announced in December that it would allow companies to test self-driving cars on public roads if certain conditions are met. Chinese investors also continue to be interested in this area.

Pony.ai recently had a $112 million funding round led by Shanghai’s Morningside Venture Capital and Beijing’s Legend Capital. While U.S. companies clearly have the lead in this area, both startups and VCs based in China aren’t shying away.

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