China GPU Start-Up Dissolves, Lays Off Staff

A Chinese start-up that had aimed to develop high-performance GPU accelerator chips capable of competing with Nvidia has reportedly dissolved amidst a cash crunch and laid off all its staff, in a blow to the country’s efforts to bolster the self-sufficiency of its domestic tech industry.

Xiangdixian Computing Technology, based in the southwestern city of Chongqing, on Friday held a meeting with staff where it announced the dissolution of the company and laid off nearly 400 employees, according to local media reports from Ijiwei, TMTPost and others, and social media posts by employees.

The company failed to fulfil the terms of a previous funding round, leading to a lawsuit by shareholders that froze teh start-up’s bank account, according to TMTPost’s report.

GPU development

The report said Xiangdixian was seeking new investors and trying to get access to its account.

Founded in September 2020, the start-up raised some 2.5 billion yuan (£270m) from investors for core research and development, and hired a team of more than one hundred industry veterans in the domestic computer and chip industries.

Aside from its headquarters in Chongqing, the company opened branches in Beijing, Chengdu, Shanghai and Suzhou.

Local media reports said the company sought new funding last year at a valuation of 12bn yuan, but failed to secure funds even after reducing its valuation to 8bn yuan.

The company began to downsize last year, including laying off senior research staff, according to reports that cited labor arbitration cases.

Cash crunch

In response to the reports of its dissolution, Xiangdixian released a statement on WeChat saying it was “facing certain market adjustment pressures” but denied it was dissolving the company or entering liquidation.

As to the reports of layoffs, the firm said it was “optimising the organizational structure and personnel configuration” and making “adjustments to some team members to reduce operating costs and improve efficiency”.

The firm said it was continuing to strengthen its core research and development and operations team, and was in active talks with investors and was looking for external financing opportunities.

US sanctions prohibiting the sale of advanced technologies to China, including high-end GPUs, have spurred the development of domestic alternatives.