Jaguar Microsystems, a startup sponsored by Tencent, bets on semiconductor innovation to support the expansion of China’s cloud computing sector.

JaguarMicro creates a new generation of programmable chips called advanced data processing units for servers used in data centres.
The Shenzhen-based digital unicorn anticipates generating more than $1 billion in annual revenue in three years.

 

With its cutting-edge new chips, Tencent Holdings-backed startup Jaguar Microsystems (JaguarMicro) hopes to become a significant technology supplier to China’s rapidly expanding cloud computing services market, offering a ray of hope for the nation’s semiconductor industry amid rising tensions between Beijing and Washington.

According to Sunny Siu, the founder, chairman, and CEO of JaguarMicro, a business situated in Shenzhen, China, the company is primarily focused on creating data processing units (DPUs), a new category of programmable systems-on-a-chip, for servers used in data centres. Sunny Siu is a Hong Kong native.

Siu told the South China Morning Post that cloud computing would “become a new utility, like electricity.” Our objective is to assist utility companies in reducing their expenses while improving output.

Similar to how electricity is obtained from a power grid, cloud computing services allow businesses to purchase, sell, lease, or distribute a variety of software programmes and other digital resources as an on-demand service over the internet.

 

Data centres, which are safe, climate-controlled buildings designed to contain powerful servers and data storage systems connected to numerous power sources and fast internet connections, handle these resources.

 

The cloud computing sector in China is expanding, according to Siu. Because of this, he anticipates JaguarMicro to generate more than $1 billion in yearly revenue over the next three years.

In a recent research, the international management consulting firm McKinsey & Co. predicted that China’s industrial and manufacturing sectors will be able to propel a new wave of growth in the country’s cloud computing market. It predicted that China’s public cloud services market, which is presently the second-largest in the world after that of the United States, will increase from US$32 billion in 2021 to US$90 billion in revenue by 2025.

According to Jensen Huang, co-founder, president, and CEO of Nvidia Corp., DPUs are anticipated to join conventional central processing units (CPUs) and graphics processing units (GPUs) as the three foundations of computing.

 

The DPU market is still in its infancy, with numerous new enterprises competing to create industry standards and benchmarks, in contrast to CPUs and GPUs, where Intel Corp. and Nvidia have already established distinct advantages in the global semiconductor industry.

JaguarMicro’s innovations for processing networking, storage, virtualization, and security applications are anticipated to fuel demand for its DPUs. According to Siu, this enables cloud platform operators to operate more efficiently and at a lower cost by freeing up a server’s CPU to perform other workloads.

 

JaguarMicro, a tech unicorn with a valuation of more than US$1 billion, was founded in 2020 and has since emerged as one of the most popular firms for investors in the DPU market. It raised more than US$200 million from a fundraising round early in 2021. Tencent owns a 24% investment in JaguarMicro, along with other venture capital firms like Sequoia Capital China, Nio Capital, the Hong Kong Science and Technology Parks Corp, and other investors.

At JaguarMicro, Siu and his core group of employees each have more than 20 years of experience working in the semiconductor sector. Personnel from firms like Broadcom, Intel, Arm, Alibaba Group Holding, and HiSilicon, the chip design division of Huawei Technologies Co., are part of its world-class silicon and software team. The Post is owned by Alibaba.

 

Prior to leading JaguarMicro, Siu, a Stanford University doctoral graduate, served as president of ProphetStor Data Services, a cloud services company he co-founded in California. In addition, Siu spent three years as the Greater China managing director for Broadcom’s processor division from 2012 to 2015, following the US company’s acquisition of NetLogic Microsystems, where he had previously held the positions of president and general manager for Asia-Pacific.

In light of the urgency created by recent US government initiatives, JaguarMicro’s recent expansion, which included establishing its worldwide operations at the Hong Kong Science Park, offers a glimmer of optimism for China’s semiconductor industry.

Washington forbade Nvidia and Advanced Micro Devices from exporting sophisticated chips used for high-performance computing and artificial intelligence to China earlier this month.

The US government imposed additional export restrictions on equipment used to make sophisticated semiconductors in August.

 

After US President Joe Biden signed the Chips and Science Act into law, which offers approximately US$53 billion in incentives for semiconductor production, it signalled an expansion of Washington’s initiatives to strengthen America’s technological lead over China.

These changes haven’t stopped JaguarMicro’s corporate development programme, either. The company, which currently employs over 400 people, established a new research and development facility at the Hong Kong Science Park last month.

A skills shortage, according to Siu, is the largest obstacle to future expansion, which is why JaguarMicro expanded to Hong Kong. He added that the company hoped to help Hong Kong become a global innovation centre, saying “There is a lot of world-class talent in Hong Kong, but they need more nurture.”