South Korea's FuriosaAI in M&A Talks with Meta;
VCs Anticipate Exit Opportunity and Boost for Domestic AI Semiconductor Industry
South Korean AI chip fabless (semiconductor design specialized) startup 'FuriosaAI' is currently in merger and acquisition (M&A) negotiations with Meta Platforms (Meta), the US parent company of Facebook, raising expectations in the domestic venture capital (VC) industry that has invested in AI semiconductor companies. FuriosaAI, which has been preparing for an initial public offering (IPO), was evaluated as a company whose valuation could reach the 1 trillion won level upon listing.
According to the VC industry on the 12th, FuriosaAI is in M&A negotiations with Meta. On the same day, the US economic media Forbes reported that Meta is negotiating to acquire FuriosaAI and that the acquisition could be completed as early as this month.
A representative from an investment firm that invested in FuriosaAI in 2019 said, "We are waiting for the negotiation results considering various possibilities," adding, "From an investor's perspective, an exit through a sale is most anticipated, but the news itself is definitely a positive development for the entire domestic AI semiconductor industry."
South Korea Lagging Behind in Global AI Competition... FuriosaAI Chips Emerge as a 'Costly' Alternative to Nvidia
Founded in 2017, FuriosaAI develops AI inference computation specialized semiconductors for data center servers. It was founded by CEO Baek Jun-ho, an engineer formerly at Samsung Electronics and US semiconductor company AMD. The company introduced its first AI semiconductor 'Warboy' in 2021 and unveiled the next-generation AI semiconductor 'Renegade (RNGD)' last August. Compared to Nvidia products, FuriosaAI's technology is not significantly behind, while its price competitiveness is considered superior. Meta is reportedly pursuing this negotiation with FuriosaAI to develop its own chips instead of paying huge costs to Nvidia.
If the sale is successfully completed, VCs that invested from the seed (early) stage are expected to reap nearly 100 times their investment, resulting in a 'big hit.' FuriosaAI has raised approximately $115 million (about 167.1 billion won) to date, and there were high expectations that it would instantly become a unicorn company (a private company valued at over 1 trillion won) upon listing. Last year, it was valued at about 700 billion won during an investment round.
Seed investments in FuriosaAI in 2017 were made by Naver, DSC Investment, and Korea Development Bank. Subsequently, Gamechanger Investment, Kyobo Life Insurance, Korea Investment Partners, and IMM Investment joined the list of investors. Most recently, Crit Ventures made a Series C bridge investment of 2 billion won earlier this year. CEO Baek is reported to hold an 18.4% stake.
"Domestic Startup Competitiveness Recognized... Overall Expectations in AI Semiconductor Industry"
However, whether the sale will actually be completed remains uncertain. Since AI semiconductor technology is a national strategic technology, unexpected variables such as government regulations could arise. Additionally, from FuriosaAI’s perspective, which has confirmed global competitiveness, selling management rights is not an urgent issue.
Therefore, there is also speculation that Meta might strengthen cooperation with FuriosaAI by investing as a strategic investor (SI) instead of acquiring management rights. A VC representative who invested in FuriosaAI said, "There are many parties lined up to invest besides Meta," adding, "There is absolutely no situation where the company lacks funds."
Nevertheless, the industry expects this negotiation itself to serve as an opportunity to further recognize the competitiveness of domestic AI semiconductor startups in the future. Attention is also growing toward 'Rebellions,' considered one of the two major domestic AI semiconductor startups alongside FuriosaAI. Rebellions completed a merger with Sapion Korea last year and was valued at about 1.3 trillion won, preparing for an IPO with Samsung Securities as the lead underwriter.
Like FuriosaAI, Rebellions received investments from Korea Development Bank and IMM Investment. In addition, major investors such as Mirae Asset Venture Investment, KB Investment, and SV Investment joined, accumulating about 300 billion won in investments last year. Besides Rebellions, DeepX and Mobilint are also recognized as leading domestic AI semiconductor startups.
A VC representative who invested in Rebellions said, "In a situation where South Korea was falling behind in the global AI competition, major domestic chip startups have been struggling individually with their unique strengths," adding, "Recently, big tech companies and telecom firms have formed alliances led by specific startups, and the government is considering related support, greatly improving the atmosphere."
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