Meta, which operates social media platforms Facebook and Instagram, is reported to be moving to acquire the Korean artificial intelligence (AI) semiconductor startup Furiosa AI, with indications that the feasibility is not negligible. This is largely due to Meta's struggles to develop its own AI chips and incurring massive expenses, making acquisition a possible avenue to explore. However, as with all mergers and acquisitions (M&A), nothing is finalized until the deal is signed. Both parties are said to plan to finalize the deal within this month.
According to investment banking (IB) industry sources on the 12th, Furiosa AI is reportedly negotiating with Meta to sell the company. The enterprise value and specific terms of the sale have not been disclosed. However, the recently recognized enterprise value of 800 billion won through a Series C bridge investment is expected to serve as a benchmark.
Industry sources believe that Meta has sufficient incentives to acquire Furiosa AI. This is due to Meta's recent development of its own AI chip, the "MTIA", which has not delivered the expected performance. Meta continues to incur massive expenses using NVIDIA chips, which dominate about 80% of the AI accelerator market.
As AI investment expenses rise, big tech companies like Meta and Microsoft (MS) are seeking alternatives to NVIDIA chips. Mark Zuckerberg, CEO of Meta, noted on the 24th of last month that the company plans to invest up to $65 billion (approximately 94.4 trillion won) in AI infrastructure, including data centers, this year.
An industry source in the semiconductor sector stated, "The prevailing view is that Meta's chip has essentially failed, and there are only a few chips globally capable of running Meta's generative AI model, LLaMA. Outside of NVIDIA, alternatives like Groq or Cerebras exist, but they are prohibitively expensive. "
Additionally, the source said, "Furiosa AI's chip is also one that can run LLaMA, and it is competitively priced compared to American chip startups, making it an attractive option for Meta. Furthermore, OpenAI, a competitor, is developing its own AI chips and is poised for production, creating a pressing situation for Meta that could lead to significant delays."
Furiosa AI, which unveiled its next-generation AI semiconductor "Renegade" (RNGD) last August, stated that "Renegade will be an ideal choice for the large-scale deployment of advanced generative AI models like Meta's LLaMA 2 and LLaMA 3." Furiosa AI plans to mass-produce Renegade at Taiwan Semiconductor Manufacturing Company (TSMC) this year.
Recent interpretations suggest that the success of Chinese AI startup DeepSeek without using expensive chips has influenced Meta's decision. Similar to OpenAI's ChatGPT, DeepSeek has launched a generative AI model that uses NVIDIA's H100 chip, but in the inference stage, it utilized Huawei's Ascend 910C chip.
An IB industry source remarked, "Many corporations, including Meta, likely observed the DeepSeek case and reconsidered the necessity of using high-performance chips. In fact, I understand that Meta has also tested products from another domestic AI chip developer, TES."
Furiosa AI is an AI semiconductor fabless startup established in 2017, led by CEO Baek Joon-ho, who is from American semiconductor company AMD and Samsung Electronics’ memory division. Furiosa AI is reported to have raised approximately $115 million (around 167.2 billion won) in funding, receiving investments from DSC Investment, KDB Industrial Bank, and Naver D2SF.