Chip Startup Rivos Challenges Nvidia with $500M Fundraising, Targets $2B Valuation

Rivos, a chip startup backed by Intel CEO Lip-Bu Tan, is looking to raise $400-$500 million to challenge Nvidia in the AI hardware market. Rivos is building a graphics processing unit designed for AI models and has completed the physical design of its GPU with promising results. The company is targeting a valuation above $2 billion and is close to finalizing a deal with a major semiconductor firm. Rivos' software will convert Nvidia's CUDA code to run efficiently on Rivos chips, making it easier for customers to switch and lowering costs.

Rivos, an artificial intelligence-focused semiconductor startup backed by Intel (NASDAQ:INTC) CEO Lip-Bu Tan, is currently seeking up to $500M in a funding round to help it compete against chip champion Nvidia (NASDAQ:NVDA), according to The Information [1]. If successful, Rivos' total funding since its inception would reach an impressive milestone, positioning it as a significant player in the AI hardware market.

Rivos is building a graphics processing unit (GPU) specifically designed for AI models. The company has completed the physical design of its GPU, showcasing promising results that could potentially challenge Nvidia's dominance in the AI hardware sector. Rivos aims to achieve a valuation above $2 billion and is close to finalizing a deal with a major semiconductor firm [1].

One of Rivos' key strategic advantages is its software, which will convert Nvidia's CUDA code to run efficiently on Rivos chips. This capability makes it easier for customers to switch to Rivos' hardware, potentially lowering costs and enhancing the overall user experience. The company's focus on AI-specific hardware and its ability to leverage existing software frameworks positions it as a strong contender in the AI hardware market.

The broader AI semiconductor sector remains robust, with global foundry giant Taiwan Semiconductor (TSM) projecting 30% revenue growth in 2025, supported by major tech companies' aggressive capital expenditure plans in data center expansion [2]. The AI GPU market shows no signs of slowing, with market projections reaching $352.5 billion by 2030 [2].

Wall Street maintains an overwhelmingly bullish stance on NVDA stock, with 38 out of 45 analysts rating it a "Strong Buy," while AMD holds a "Moderate Buy" consensus with a mean price target of $183.27 - about 6% higher than current prices [2]. The next big catalyst for the duo could be Nvidia’s quarterly earnings report, due out after the close on Aug. 27. As of today, options traders are pricing in a bigger-than-usual 7.54% price swing for NVDA after the report [2].

Rivos' funding round comes at a time when the AI hardware market is experiencing significant volatility. Nvidia and AMD are experiencing notable fluctuations due to a unique arrangement requiring 15% of China-related AI chip revenue to be paid to the U.S. government in exchange for export licenses to sell their AI chips in China [3]. This arrangement has sparked debate among legal scholars and industry experts, who raise constitutional concerns about the potential violation of the prohibition on taxes on exports [3].

Despite the challenges posed by geopolitical risks and revenue-sharing agreements, Rivos' strategic focus on AI-specific hardware and its ability to leverage existing software frameworks position it as a strong contender in the AI hardware market. As the company seeks to raise $400-$500M in a funding round, investors should closely monitor its progress and the broader AI hardware market dynamics.

References:
[1] https://seekingalpha.com/news/4484823-ai-chip-startup-rivos-pursues-500m-funding-round-to-design-gpus-challenge-nvidia-report
[2] https://www.ainvest.com/news/nvidia-amd-stocks-volatile-china-ai-chip-deal-2508/
[3] https://www.ainvest.com/news/nvidia-strategic-exposure-china-policy-risk-geopolitical-licensing-decisions-impact-ai-chip-demand-stock-valuation-2508/