One of the leading AI chip designers in China, Horizon Robotics, is raising a maximum of $1 billion in a financing exercise that will propel it to hit a valuation of between $3 billion and $4 billion.
Enjoying the backing of Intel, the three-year-old firm is among several Chinese companies looking forward to creating AI chips for surveillance cameras, autonomous driving cars among other internet-linked smart gadgets.
Yu Kai, the co-founder of Horizon, is known for spearheading the autonomous driving project at Baidu, a Chinese-based tech giant.
Currently, he is leading Horizon’s tie-up with Audi, which is intended to develop autonomous driving vehicles in China’s eastern city of Wuxi.
Horizon boasts a chip that not only runs facial recognition algorithms but also allows cameras to spot faces from a database made up of 50,000 faces.
The recent fundraising round is one of the largest in China’s growing artificial intelligence (AI) sector and comes at a time when the country is developing its semiconductor industry.
Disgruntled with the country’s dependence on imported semiconductors, Beijing has allocated a considerable amount of money to the country’s domestic industry.
However, with SMIC continuing to make chips that are several generations behind including those produced by abroad entities such as Intel of the United States and Taiwan’s TSMC, there has been an emergence of new players with a mission to design AI chips for surveillance cameras, self-driving cars, and other numerous IOT devices.
“You can debate how many cars will be self-driving by when,” said Mark Li, a semiconductor analyst based at Bernstein Research. “In my view, it will be a while, but along the way, you will have more and more self-driving functions in the cars — and in addition, some chips could be used elsewhere, like facial recognition surveillance.”
Stone Li, Horizon’s senior business development manager, asserted that investors in the ongoing series B financing round include a global chip company.
Although investors have started shying away from China’s AI space, which was previously a red-hot industry that was primarily championed by both the private sector and the government, US dollar funds are continuing to grow, and several startups like top-ranked Bytedance are raising billions of dollars.
Private equity firms are also stockpiling US dollar funds, with Hong Kong-based PAG recently setting the pace by raising $6 billion.
The firm joins the ranks of both KKR and Hillhouse Capital, which have both fundraised over $9 billion to invest in the region.
UBS anticipates that the market for transferring AI from the cloud to gadgets will hit $15 billion by 2021.
According to an analyst report, Chinese companies like Horizon and Eyemore, “are still small compared to global leaders, but their access to abundant venture capital and strong government support might be a growth booster going forward.”
Some of the existing Horizon investors consist of Sinovation Ventures, Yuri Milner, Sequoia Capital, and Hill House Capital.
“They’re making progress and have got some heavyweight partners in the auto industry, teaming up with Audi to develop automated driving technology,” claimed Mark Natkin, the managing director of Marbridge Consulting, a Beijing –based company.