AI chip startup snubs surprising offer from Mark Zuckerberg | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Anyone alive in the mid-2000s remembers an era in which Facebook, not yet Meta Platforms (META) , dominated Silicon Valley. Startup entrepreneurs worked tirelessly to have their companies acquired by Zuckerberg.

In his 2019 book Bitcoin Billionaires, Ben Mezrich details Cameron and Tyler Winklevoss’s challenges when they attempted to launch a venture capital firm in Zuckerberg’s Silicon Valley. The brothers quickly found that even cash-strapped startups were afraid to do business with them for missing out on an offer from Facebook’s founder.

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Years later, Meta Platforms’ reputation has taken some hits. However, through it all, the company has maintained its dominance in the tech world, partially due to its habit of buying up any competitors.

It may be hard to imagine anyone saying no to Zuckerberg. But recently, an artificial intelligence (AI) startup shocked the tech world as it did exactly that.

A little-known AI chip startup recently rejected an acquisition offer form Mark Zuckerberg’s Meta Platforms.

David Paul Morris/Bloomberg via Getty Images

AI chipmaker doesn’t want to do business with Meta

Unless you follow the South Korean tech startup scene, you might not be familiar with a company called FuriosaAI. But Zuckerberg certainly is, and his company recently offered to spend a lot of money to acquire it.

Founded in 2017 and based in Seoul, South Korea, FuriosaAI builds chips for a wide range of AI applications and counts LG AI Research and Saudi Aramco among its customers. According to reports, Meta has been looking to acquire it since February, likely seeing it as a strategic way of expanding its own AI chip production.

Unfortunately for Zuckerberg, FuriosaAI has opted against accepting Meta’s $810 million offer, which likely surprised many. Most early-stage startups don’t reject a large buyout offer from an industry leader, but the company is clearly focused on scaling its own operations.

This is likely a blow to Meta, who is highly focused on building its own AI chips to compete in an increasingly competitive market. As TechCrunch reports:

“Along with other tech companies building large language models (LLMs) for various AI applications, Meta has been trying to reduce its reliance on Nvidia for chips that are specialized for training and building LLMs. The tech giant last year unveiled its custom AI chips, and in January said it would invest up to $65 billion this year to support its AI initiatives.”

So far, the little-known startup hasn’t issued any statements on its decision to reject the Meta offer or offered context as to the logic behind it. The company is not well known outside of South Korea, but Meta’s interest is a good endorsement for its products, as the leading tech company could have attempted to buy any AI chip startup.

Meta hasn’t discussed its plans following the rejection, indicating if it plans to submit a counteroffer or shift its focus to other potential AI chipmaker acquisitions. However, the company will likely opt for the latter as its options for chip partners are vast.

Is FuriosaAI the next Nvidia?

While not much is known about FuriosaAI’s operations or future plans, the company saw it as being in its best interest to reject Meta’s offer. This suggests that the startup has big plans of its own and believes it is best served by focusing on those and not on allowing itself to become part of Meta’s empire.

EMarketer also believes the decision could end up helping FuriosaAI in the long run. “The failed purchase could be a long-term win for FuriosaAI, whose customers include LG AI Research and Saudi Aramco,” it notes. “If it’s modeling itself after Nvidia, FuriosaAI can cater to a larger pool of customers desperate for alternative AI hardware.”

Comparing any startup to an industry leader like Nvidia (NVDA) may seem like a stretch, given Nvidia’s dominance over the AI chip maker. However, remaining independent will help FuriosaAI continue to expand and likely serve more clients.

Demand for AI chips isn’t going anywhere, though companies are working hard to snap up startups in the space. If FuriosaAI can establish itself as a dominant player in the fast-growing industry, it may be destined for significant growth in the coming years.