Microsoft-Backed Startup D-Matrix To Compete With Nvidia In Bid For AI Dominance

The chips are down in the artificial intelligence (AI) market, and Nvidia Corporation’s NVDA stronghold appears unshakeable.

D-Matrix, a Silicon Valley startup backed by Microsoft Corp MSFT, suggests the arena isn't quite settled.

Nvidia has long enjoyed its dominance in the AI chip market — notably in 2023 — bolstered by its mix of hardware and software. Their lead in the race has been so pronounced that budding startups find themselves cowering in the tech giant's shadow, a sentiment echoed by industry sources that Reuters spoke with.

D-Matrix's recent $110-million Series B funding round, spearheaded by Singapore-based Temasek and buoyed by Playground Global and Microsoft, puts the startup in a strong position.

"This is capital that understands what it takes to build a semiconductor business," CEO Sid Sheth told Reuters.

D-Matrix started its fundraising endeavors about a year ago and has since locked in investments nearing $154 million.

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D-Matrix investors are focused on the company’s innovation. Tailored chips, optimized for generative AI applications like OpenAI's ChatGPT, are its unique selling proposition. The digital "in-memory compute" ensures an efficient AI code run, reducing the data crunching power, which in turn ensures seamless generative AI responses.

The startup also sidestepped a direct collision with Nvidia, as the company zeroes in on the "inference" facet of AI processing instead of wrestling in the AI model training segment.

With claims of breakthroughs in computer architecture, power requirements, and an industry-leading low latency software stack, Playground partner Sasha Ostojic said d-Matrix is staking its claim.

Microsoft isn't just a silent investor either, as the tech behemoth is actively considering the startup's chip for its ventures.

With a modest revenue projection of under $10 million this year — primarily from chip evaluations — the startup anticipates $70 to $75 million annual revenue within two years.

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