(Bloomberg) -- Artificial intelligence chip startup Tenstorrent Inc. is drawing early takeover interest from prospective buyers at a moment of renewed momentum for upstarts looking to challenge Nvidia Corp. and Advanced Micro Devices Inc.
Tenstorrent, which designs chips that it says are more efficient at running certain AI workloads, has held conversations with industry players including Intel Corp. and Qualcomm Inc., according to people familiar with the matter.
The Santa Clara, California-based company has been speaking to investment banks about evaluating its options, the people said, asking not to be identified because the matter is private. Other chip companies could also look to bid should the company decide to sell itself, they added.
The company could be valued at more than $5 billion in a potential transaction or perhaps more depending on how valuations fare in the sector following Cerebras Systems Inc.’s recent initial public offering, some of the people said.
While it entertains interest from would-be buyers, Tenstorrent is continuing to court prospective investors in a funding round, the people added.
Representatives for Tenstorrent, Intel and Qualcomm declined to comment.
Chipmakers of all sizes are looking to seize on technology and talent at the cutting edge of AI and inference.
Cerebras, which also makes specialized AI chips, received a takeover approach from Arm Holdings Plc and its majority owner SoftBank Group Corp. just days before its initial public offering, Bloomberg News reported.
Cerebras rebuffed that approach and priced its shares above-range at $185 each on Wednesday, raising $5.55 billion in the year’s biggest listing. The stock surged 68% in the company’s trading debut. Cerebras closed trading Monday up about 6% to $296.65, giving it a market value of around $65 billion.
The rapidly evolving landscape for so-called inferencing chips is also complicating — and in some cases boosting — valuations for startups like Tenstorrent. Deals including Nvidia’s reported $20 billion licensing agreement to acquire assets from Tenstorrent rival Groq Inc. and a new funding round for Intel Capital-backed SambaNova Systems Inc. have prompted players to reevaluate their strategic value to deep-pocketed incumbents in the AI ecosystem.
The Information reported last November that Tenstorrent was in talks to raise several hundred millions of dollars in fresh capital in a deal led by current investor Fidelity Management at a pre-money valuation of about $3.2 billion.
