Cerebras Systems, now a public company, supplies AI chips for inference to major companies like OpenAI and AWS. The company had a successful IPO recently, making both co-founders billionaires, and it finished the week valued at around $60 billion.
In 2019, when three years old, Cerebras nearly failed despite burning through substantial funds. It was tackling a semiconductor issue deemed impossible by the industry.
Founder CEO Andrew Feldman recounted the period to TechCrunch, stating they spent roughly $8 million monthly, and had gone through almost $200 million trying to overcome one technical challenge. Feldman would often report to the board about failures and wasted money.
Without a solution, Cerebras would have ceased operations. The company’s concept was simple on paper: rather than making CPUs quicker and cheaper over 50 years by adding more transistors and reducing wafer size, AI needed immense compute power. Cerebras’ founders believed that transforming an entire wafer into a large, powerful chip would be more effective.
However, achieving this was unprecedented, presenting complex engineering challenges due to the larger surface area and numerous microscopic components.
Cerebras’ team managed to design the mega chip and manufacture it with TSMC, but faced a major challenge: “packaging”—incorporating the chip into a system with power, cooling, and data management. With chips 58 times larger and using 40 times more power than ever before, they had no heat sinks, vendors, or partners.
After many trials, resulting in numerous damaged chips and financial loss, Cerebras eventually solved key issues like cooling and data movement. They even developed a machine for securing wafers with 40 screws simultaneously.
Feldman fondly recalled July 2019 when the chip, finally operational, was installed in a computer. Watching it work was an emotional victory for the founding team.
This breakthrough was significant as the same team previously sold a cloud server startup, SeaMicro, to AMD for $334 million in 2012.
Two years before OpenAI considered acquiring Cerebras, talks eventually dissolved amid internal disputes at OpenAI, despite several founding angels investing in Cerebras.
Currently, OpenAI is a customer and partner, having loaned Cerebras $1 billion secured by warrants amounting to about 33 million shares, valued over $9 billion at the latest stock price.
Interestingly, the loan deal includes a condition preventing Cerebras from selling to certain OpenAI competitors, though Feldman indicated this restriction is temporary. He noted Cerebras prioritizes manageable customer capacity over rapid expansion, promoting a measured growth approach.