Cerebras, $60B AI chip, nearly dies early, burning $8M a month

Today, Cerebras Systems is a publicly operated company It sells AI chips for inference For giants like OpenAI and AWS. held a The initial public offering is Thursdaywith both of its founders being billionaires, ended the week with a valuation of about $60 billion.

But in 2019, when she was three years old, she came dangerously close to failure, burning through a staggering amount of money. It was trying to solve a technical problem that no one in the semiconductor industry thought could be solved.

“We were spending about $8 million a month,” founding CEO Andrew Feldman told TechCrunch of that period. “At this point, we’ve burned through nearly $200 million trying to solve a single technical issue.”

Every few weeks, Feldman would have to make an agonizing walk of shame to a board meeting to report another failure and more money wasted.

But he had no choice. Without a solution, Cerebras was dead anyway.

It was founded with a simple idea on paper. The microprocessor industry has spent more than 50 years making CPUs faster and cheaper by cramming more transistors onto a silicon wafer and cutting chips into smaller pieces. But AI required a lot of computing power, as many chips had to be linked together and then forced to communicate with each other. Cerebras’ founders believed that by turning an entire, larger chip into one giant, powerful chip, it would work faster.

The problem is that no one has ever successfully done this before, for whatever reason, AI or not. Organizing many microscopic electronic components on a larger, but still thin, surface has given rise to complex geometric problems.

Once Cerebras crossed the first threshold of designing and then manufacturing the massive chip with TSMC, the team reached the real milestone.

They couldn’t solve the “packaging” problem. This includes everything after the silicon itself is manufactured: sticking it to the motherboard, delivering power to it, handling the heating and cooling as well as the pipes that would deliver and return data, Feldman said.

The Cerebras chips “were 58 times larger. We were using 40 times as much energy as anyone has ever used,” he said. There were no prefabricated heat sinks. No sellers. There are no manufacturing partners. The brightest minds in microprocessor engineering have tried for decades to build such larger, denser chips, but have failed.

The Cerebras team was left facing trial and error as we “destroyed an enormous number of chips” and an enormous amount of money. But without functional packaging, the chip was useless.

After a thorough analysis of each failure, the team was finally able to solve enough problems: how to cool it and transmit data. In one case, they had to invent their own machine that could install 40 screws at a time to hold the chip to the board without cracking it.

Feldman still remembers the day in July 2019 when everything miraculously worked out.

They installed the packaged chip into a computer, turned it on, and the entire founding team (pictured below) stood in the lab and stared at it, he said. “Watching the computer running is as exciting as watching paint dry. But we were watching the lights flash on the computer, and we were amazed that we had solved this problem.”

“That was one of the greatest moments of my life,” he said. This is important, because this same founding team had previously built and sold a leading cloud server startup, SeaMicro, To AMD for $334 million in 2012.

The day the chip finally worked was about two years after OpenAI talked to Cerebras to acquire it, Feldman confirmed to TechCrunch. Such as emails that have been publicly disclosed He said that.

Those talks failed amid growing disagreements between OpenAI’s founders, many of whom are angel investors in Cerebras.

Today, OpenAI is a client and partner, lending Cerebras $1 billion in collateral. These warrants conditionally grant OpenAI approximately 33 million shares of Cerebras stock, the S-1 disclosed. (The 33 million shares are worth more than $9 billion at Friday’s closing price of $279.)

Interestingly, Cerebras also agreed not to sell its products to specific OpenAI competitors as part of that loan deal. Feldman does assert that the obvious company this implies is: the anthropic. But he said the restriction was temporary.

“It’s time-limited, and it’s designed to make sure we can get the capacity of OpenAI,” he said.

The truth is that Cerebras has not yet grown enough to handle many rapidly growing model makers anyway. He likened selling AI computing power to an all-you-can-eat buffet. Instead of trying to attract all potential customers, he said, “We’ll only work with part of the buffet, and we’ll feel comfortable with that, before we attack the rest.”