Japan startup Preferred Networks designs own AI chips to beat bottleneck

By Sam Nussey and Miho Uranaka

TOKYO (Reuters) – Japanese startup Preferred Networks is ramping up investment in customised artificial intelligence chips, seeking to ensure access to critical hardware as advances in generative AI spark a global investment boom.

The company, whose investors include automaker Toyota and robot maker Fanuc, began developing its first generation AI chip in 2016 to power its supercomputers.

“We knew we needed to optimise energy consumption and minimise procurement risk, which could make it difficult to sustain our business,” Preferred Networks co-founder and CEO Toru Nishikawa said in an interview.

Companies around the world are scrambling to secure AI chips amid excitement over the potential of the technology with Amazon and Microsoft among firms designing chips in-house.

Preferred Networks has completed the design of its second generation AI chip, which is being manufactured by TSMC and will power its new supercomputer.

The startup said its chips have been optimised for AI tasks, with lower power consumption and improved computing power, in part by transferring functions usually performed by hardware to software.

Preferred Networks plans to offer its latest technology for creation of large language models and drug discovery next year and pure computing power to customers by 2027.

(Reporting by Sam Nussey; Editing by Christopher Cushing)