Tesla, Apple Supplier Delta To Pour $7M In AI Semiconductor Startup Amid Chip Shortage

Tesla Inc TSLA and Apple Inc AAPL power components supplier Delta Electronics is backing Kneron, an artificial intelligence startup that develops semiconductors with a $7 million investment, reported TechCrunch Thursday.

What Happened: The San Diego, California headquartered Kneron has also reportedly agreed to buy Vatics, a part of Delta Electronics’ subsidiary Vivotek, for $10 million in cash as a part of the deal. 

The acquisition will complement Kneron’s existing business as it makes efforts to expand to the smart car industry.

Vatics executives will join Kneron in order to lead the latter’s surveillance and security camera division. The merged workforce will develop both surveillance and automotive products for Kneron.

This acquisition will allow us to offer full-stack AI solutions, along with our current class-leading NPUs [neural processing units], and will significantly speed up our go-to-market strategy,” said Albert Liu, as per TechCrunch.

See also: How to Invest in Tesla Stock

Why It Matters: Image signal processors, along with neural processing units are used in the detection of objects which aids in the safety of automated cars.

Notably, the Delta Electronics investment comes at a time when the world is reeling from a semiconductors shortage, which has brought vehicle manufacturing plants to a grinding halt.

Kneron has automotive partnerships with Hon Hai Precision Industry Co, Ltd HNHPF — also known as Foxconn, and Otus, a supplier for Honda Motor Co Ltd HMC and Toyota Motor Corporation TM.

See Also: Apple Supplier Foxconn Is Exploring North American EV Manufacturing Sites

The company is a competitor to Intel Corporation INTC and Alphabet Inc GOOGL GOOG subsidiary Google.

According to Kneron’s website, existing investors include Alibaba Group Holding Limited’s BABA non-profit initiative Alibaba Entrepreneurs Fund, Qualcomm Incorporated QCOM, and Sequoia. 

Tesla CEO Elon Musk said late last month that the next version of the company’s full-self-driving software will “blow your mind.”

Musk said at the time that the company was “almost there” in overcoming the limitation related to achieving and proving higher safety “with pure vision” than a combination of vision and radar.”

Price Action: On Wednesday, Tesla shares closed nearly 0.4% lower at $670.94 the regular session and another 0.66% in the after-hours trading. On the same day, Apple shares closed 0.2% higher at $128.10 in the regular session.

Read Next: Apple Supplier TSMC Expects To Catch Up With Customers' Chip Demand By June

Photo: Courtesy of Kneron