Tencent invests $279 million in AI chip startup
Published 8 January 2021
Tech giant Tencent has invested a staggering $279 million (1.8 billion yuan) into an artificial intelligence (AI) semiconductor chips manufacturing company in China.
Enflame Technology, headquartered in Shanghai, has received funding from Tencent and several other investors including China’s state-owned conglomerate group CITIC, and investment firms China International Capital Corporation (CICC) and Primavera.
Tencent’s investment will allow it to segue into the booming semiconductor chip industry, which is currently dominated by NVIDIA, AMD, and most recently, Intel after its acquisition of US chipmaker Xilinx.
This move by the Chinese tech company is also expected to contribute to China’s plan to become more self-reliant in the technology sector after numerous tech-related bans by the US, such as TikTok and Huawei’s 5G development.
Founded in 1998, Tencent is best known for messaging app WeChat and multiplayer video game League of Legends. The company reported $5.88 billion in profit in the third quarter of 2020, a 29% year-on-year increase.
This is Tencent’s fourth time injecting funds into Enflame Technology, which was founded in 2018.
Semiconductor chips produced by companies such as Enflame Technology are becoming more important to the global tech market, because these chips are capable of processing large amounts of data which are used to train AI models and power data centers.
AI technology is taking over
Technological developments, increase in demand for Big Data and analytics, and increased digitisation across all sectors are factors fuelling the growth of the global AI hardware market.
The onset of COVID-19 has fuelled utility & adoption of artificial intelligence (AI) hardware, due to its ability to screen, track and predict the present and future patients affected by coronavirus infection. According to the NewVantage Partners, the number of companies that invest over $500 million annually in big data increased to 21.1% in 2019 from 12.7% in 2018, indicating the importance of AI and Big Data across organizations, hence propelling industry growth.
Meanwhile, Asia Pacific market is anticipated to experience robust growth over 2020-2027, owing to increasing investment in AI technology by different end-use industries, and rising demand for big data and analytics in the region.