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Axera wants to use the new funding to increase its efforts in the semiconductor space, and also ensure a continuous supply to ease scarcity.
Chinese artificial intelligence chip manufacturer Axera Technology recently raised CNY800 million (USD126 million) from a new funding round. Notable among the participating investors was Meituan (HKG:3690), a Chinese shopping and food delivery firm. Other participants were Qiming Venture Partners and GGV Capital. The new exercise marks Axera’s second round of financing in the past six months, and its fourth overall since inception. According to the Beijing-headquartered startup, it intends to use the fresh capital to grow its operations and recruit adept employees.
Axera Funding Comes amid Growth in Semiconductor Investments
Axera’s latest funding is indicative of a growing trend in investor appetite for semiconductor startups in China. Axera previously stated that there was an exponential growth in global demand for AI chips and semiconductors. In fact, according to reports, there are expectations that the market scale will hit a staggering $72.6 billion by 2025. At the moment, this still seems a long way off from the $17.5 billion AI global market cap recorded last year. However, if the ongoing noted activities in research and development into semiconductors happening in Beijing is anything to go by, that target seems feasible.
Beijing has been fostering self-sufficiency in a number of technological innovations – including AI chips. The overall initiative, dubbed “frontier technology” is part of a broader long-term plan for the East Asian nation to compete with the US. Meanwhile, China wants to drastically decrease its dependency on the foreign technology it needs for its smartphones and cars in the short term.
In recent times, due to a combination of factors – including Covid, there has been a global shortage of semiconductor chips. This has subsequently affected some of the biggest industries that depend on it as a vital component to their end-user products. It was not uncommon to see sporadic delays in the rollout of new automobile models for car manufacturers. This chip scarcity also partly contributed to the hike in the prices and initial supply deficiencies of next-generation gaming consoles.
Meituan’s involvement with Axera makes the food delivery giant the latest prominent tech company to invest in a chip company. Previously, tech-focused holding company Tencent (HKG: 0700) invested in Endflame Technology in 2021. In addition, Tencent also launched three chips of its own.
AI and internet specialist Baidu also launched the second generation version of its chip Kunlun 2, with emphasis on autonomous driving.
Axera, founded in May 2019, is a developer of good-value-for-money computer vision processors. These are applicable in a host of spaces such as autonomous driving, smart cities, wearables, and smart homes. So far, Axera has shown incredible proficiency since its inception, mass-producing two products in less than three years. In August 2021, the AI manufacturer also raised funds to beef up its business. Furthermore, Meituan also played a key role in that previous round, co-leading the investor pool alongside Inno Chip.