Nvidia's supremacy in building computer chips for artificial intelligence has chilled venture funding for would-be rivals, investors have said, with the number of U.S. deals this quarter falling 80% from a year ago.
The Santa Clara, California company dominates the market for chips that work with massive amounts of language data. Generative AI models get incrementally smarter through exposure to more data, a process called training.
As Nvidia has grown stronger in this area, the harder it has become for companies attempting to build competing chips. Seeing these startups as a riskier bet, venture financiers are newly unwilling to provide big cash infusions. Advancing a chip design to a working prototype can cost more than $500 million, so the pullback has quickly threatened the startups' prospects.