Despite Nvidia's dominance, there are potential opportunities for competitors in adjacent applications, such as chips for data-intensive computing for prediction algorithms. Furthermore, AMD and Intel are developing chips to compete with Nvidia's, which could provide long-term alternatives in the sector. However, chip startups are now facing tougher demands from investors, who require companies to have a product close to launch or already generating sales.
Key takeaways:
- Nvidia's dominance in the AI chip market has led to a significant decrease in venture funding for rival startups, with the number of U.S. deals dropping 80% from a year ago.
- U.S. chip startups have raised $881.4 million through the end of August, compared to $1.79 billion for the first three quarters of 2022, and the number of deals has dropped from 23 to four.
- Investors are now demanding that chip startups have a product that is within months of launch or already generating sales, and new investments have fallen from $200-300 million to about $100 million.
- Despite Nvidia's dominance, there are potential alternatives and openings for competitors, such as AMD's planned chip launch and Intel's acquisition of a rival product, as well as emerging niches like chips for prediction algorithms.