Nvidia-backed SiFive reaches $3.65B valuation amid surge in open AI chip demand

SiFive, a chip design company established in 2015 by engineers from UC Berkeley who pioneered an open-source processor architecture, has secured an oversubscribed $400 million funding round, pushing its valuation to $3.65 billion.

The deal stands out for several reasons. One of the key factors is SiFive's use of the RISC-V architecture, an open-source chip design built on RISC principles, rather than relying on traditional CPU architectures like Intel's x86 or ARM. These conventional architectures dominate the CPUs that power the AI ecosystem surrounding Nvidia's GPU-driven computing platforms.

NVIDIA itself participated in this latest funding round, joining a wide group of venture capital firms, private equity investors, and hedge funds. The round was led by Atreides Management, an investment firm founded by former Fidelity executive Gavin Baker. Atreides has also previously backed large funding rounds, including a $1 billion raise by Cerebras Systems.

Other participants in the round included Apollo Global Management, D1 Capital Partners, Point72 (via its Turion arm), T. Rowe Price, and Sutter Hill Ventures, among others.

SiFive operates under a business model similar to Arm's historical model, in which it licenses chip designs rather than manufacturing chips itself. Customers can customise these designs to meet their requirements. However, this model has seen shifts recently — Arm itself began producing its own chips earlier this year, launching an AI-focused processor developed in collaboration with Meta, with clients including OpenAI, Cerebras, and Cloudflare.

SiFive's position in the semiconductor landscape is relatively unique. Its chip designs are both open and neutral, meaning they are not tied to proprietary ecosystems or dependent on specific customers. This flexibility has helped it stand out in a market typically dominated by closed architectures.

The company had not raised new capital since March 2022, when it secured $175 million in a round led by Coatue Management at a pre-money valuation of $2.33 billion, according to PitchBook estimates. That earlier round also included participation from Intel Capital, Qualcomm Ventures, and Aramco Ventures.

Historically, RISC-V technology has been more commonly used in smaller-scale applications such as embedded systems. However, with this new funding and Nvidia's backing, SiFive is now expanding into the development of CPUs for AI data centres. Its chip designs are being positioned to integrate with Nvidia's ecosystem, including compatibility with CUDA software and NVLink Fusion. This rack-scale server architecture allows various CPUs to connect to Nvidia's larger AI computing infrastructure, sometimes described as an "AI factory."

While competitors like Intel and AMD continue working to challenge Nvidia's dominance in GPUs, Nvidia is simultaneously supporting an alternative approach by investing in a startup that builds CPUs using an entirely different, open architecture.