Skip to main content

Canada Pension Plan Investment Board and Intel Capital have co-led a $125-million investment in a Toronto semi-conductor maker that aims to power the fast-expanding computing needs of artificial intelligence technology.

The financing of Untether AI Corp. was also co-led by Tracker Capital, founded by Cerberus Capital Management LP co-chief executive officer Stephen Feinberg, and backed by past investor Radical Ventures of Toronto. Intel led the company’s first institutional venture funding two years ago.

It’s the third time in two months that Toronto-based chipmakers focused on serving AI uses have raised nine-figure sums from investors, following private fundings in May by Tenstorrent Inc. and Xanadu Quantum Technologies Inc. Also that month, Alphawave IP Group PLC, another semi-conductor company managed out of Toronto but recently redomiciled to Britain, went public on the London Stock Exchange.

“Canada has a rich history in the semi-conductor space and there’s a lot of chip industry know-how and innovation happening in Toronto,” Radical co-founder Tomi Poutanen said. “The paradigm that’s shifting is there’s a clear change in the computational load” to serve AI that traditional chips weren’t designed to handle, he said.

The Toronto startups join a crowded market of next-generation chip developers and industry giant Nvidia Corp., all of them aiming to serve exploding demand for the intricate and complex needs of AI algorithms that power search and recommendation engines and underpin developing technologies such as driverless vehicles. California-based SambaNova Systems Inc., Groq Inc. and Mythic Inc., and British-based Graphcore, are among those that have collectively raised more than US$1-billion to build hardware that can handle AI processing needs.

The surge of investment comes against a backdrop of a worldwide chip shortage caused by supply chain disruptions during the COVID-19 pandemic, which has hit smartphone makers and many other industries.

Untether’s Silicon Valley-based CEO Arun Iyengar said he expects AI chips, which now account for 3 per cent of the US$400-billion-plus chip market, to surpass 50 per cent by 2030. He said Untether is competing for a subset of the market expected to generate US$63-billion in sales in 2025, more than four times current levels.

“The hardware has progressed to the point you can come up with chips that support AI at its fullest … to solve some of the world’s intractable problems,” Mr. Iyengar said in an interview.

Untether’s chip is built to improve on the effectiveness and power efficiency of classic semi-conductors with an innovative design that cuts the distance data must travel by placing the memory and processing side by side on the hardware. The design helps speed up the kind of processing required for AI: For example, an Untether processor trying to detect the subject in an image can analyze several pixels simultaneously, rather than one at a time as a typical desktop chip would, said Mr. Poutanen, an Untether director.

“AI has become a key enabling technology for many industries and Untether AI’s novel compute architecture has the potential to accelerate adoption across a number of use cases providing a strong value proposition to its customers,” Leon Pedersen, managing director, head of thematic investing with CPPIB, Canada’s largest institutional investor, said in a news release.

Mr. Iyengar said Untether is targeting three classes of customers: providers of vision-based systems including robots, autonomous vehicles and drones; financial services giants; and data centres.

The company, which announced its first product at the end of 2020 and recently began shipping, is still in its early stages of generating revenue, but “our goal is to get to tens of millions of dollars” in sales next year, the CEO said. Untether plans to double its 75-person team, primarily based in Toronto, in the next nine months, focusing on customer support and engineering to develop further products.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.