AI chip startup DEEPX secures $80M Series C at a $529M valuation

DEEPX is a South Korean on-device AI chip (NPU, or neural processing unit) startup that makes hardware and software for various AI applications in electronic devices. The company announced this week that it has raised $80 million (KRW 108.5 billion) in a Series C round at a valuation of $529 million (KRW 723 billion), which has surged more than eight times from its Series B funding, about $15 million, in 2021.

The Series C funding, which brings its total raise to around $95 million, will go toward mass production of the startup's inaugural products — DX-V1, DX-V3, DX-M1 and DX-H1 — in late 2024 for global distribution. The startup will also use the new capital to expedite developing and launching its next generation of large language model (LLM) on-device solutions.

DEEPX was founded in 2018 by CEO Lokwon Kim, who previously worked at Apple, Cisco Systems, the IBM Thomas J. Watson Research Center and Broadcom.

The market size of global edge AI, also called on-device AI, is projected to reach $107.47 billion by 2029, up from $11.98 billion in 2021, according to a recent report. "The on-device AI market, excluding edge servers, requires AI capabilities to be implemented, bypassing servers or the cloud," Kim told TechCrunch. "The [on-device AI market] is expanding due to computer vision capabilities like facial and voice recognition, smart mobility, robotics, the internet of things and physical security systems."

Kim said that if its mass production begins this year, potential customers such as end-product manufacturers will be able to commercialize their products with DEEPX's AI chips in 2025.

DEEPX, which has around 65 employees, is not the only company that has developed AI chip solutions. The Korean outfit competes with Hailo, which landed a $120 million funding round last month;, which closed on $70 million, also in April; and Axelera, a Belgium-based AI chip startup that secured $27 million in 2022.

Kim said that his company's differentiators include cost efficiency, energy consumption efficiency and All-in-4 AI Total Solution, a comprehensive solution for various AI applications. Its All-in-4 AI solutions include: DX-V1 and DX-V3, designed for vision systems in home appliances, surveillance camera systems, robot vision and drones; as well as DX-M1 and DX-H1, which are designed for AI computing boxes, AI servers, smart factories and AI booster chips. DEEPX now has more than 259 patents pending in the U.S., China and South Korea, Kim said.

"Nvidia's GPGPU-based solutions are the most cost-effective for large language model services like ChatGPT; the total power consumed by GPUs operating has reached levels exceed the electrical energy of an entire country," Kim said. "This collaborative operation technology between server-scale AI and on-device large AI models are expected to reduce energy consumption and costs a lot compared to relying solely on data centers."

The startup does not have customers yet but is collaborating with more than 100 potential clients and strategic partners, such as Hyundai Kia Motors Robotics Lab and Korean IT company POSCO DX, to test DEEPX's AI chip capabilities.

SkyLake Equity Partners, a South Korea-based technology-focused private equity firm, led the latest investment, with participation from BNW Investments, a Korean private equity firm founded by the former president of Samsung LED and Samsung Electronics' memory chip unit. AJU IB and previous backer Timefolio Asset Management also participated in this round.