Untether AI Files for Bankruptcy After AMD Acquihire Agreement

Toronto-based artificial intelligence chipmaker Untether AI has filed for bankruptcy following its earlier acquihire agreement with Advanced Micro Devices (AMD). The company, which had been developing chips aimed at accelerating AI workloads, officially submitted its bankruptcy notice to creditors on October 14, 2023. As part of the acquihire, Untether AI transferred its software and hardware engineering employees to AMD, a significant player in the semiconductor industry.

The bankruptcy filing reveals that Untether AI has approximately $25 million in assets but faces liabilities exceeding $128 million, resulting in a deficiency of $103.6 million. The primary reason cited for the financial turmoil is a “lack of working capital/funding.” Reports indicate that Untether’s fundraising efforts were severely impacted by Nvidia’s dominance in the AI chip market and economic uncertainties linked to tariffs imposed by the United States.

According to a statement of affairs, the company holds cash assets valued at $25 million, while its only other assets—intellectual property and lab equipment—are valued at just one dollar each. The statement was signed by Tomi Poutanen, one of the company’s co-founders and a partner at Radical Ventures, which was an early investor in Untether.

Untether AI’s investors have emerged as some of its largest unsecured creditors. The debts include $33 million owed to Middlefield Ventures, $28.5 million to two funds associated with Radical Ventures, and $20 million to TCM-Untether Holdings. Additionally, two funds from General Motors Ventures account for $18.3 million, and the Canadian Pension Plan Investment Board holds a claim of $14.8 million.

Founded in 2018 by Martin Snelgrove, Darrick Wiebe, and Raymond Chik, Untether AI aimed to create chips that would allow AI applications to “run faster and cooler.” The company marketed its products as superior in speed and energy efficiency compared to competitors. Throughout its existence, Untether AI successfully raised $152 million USD (approximately $208 million CAD), including $125 million USD raised in 2021.

In early 2024, Chris Walker, a veteran from Intel, was appointed as CEO, succeeding Arun Iyengar. Walker expressed optimism about fundraising initiatives during his brief tenure, leaving the company just a month before the AMD agreement was finalized.

The financial challenges faced by Untether AI mirror struggles experienced by other Canadian firms this year due to tariffs, including the insolvency of online fashion retailer Ssense and sleep technology company Smart Nora. This trend highlights a broader issue where Canadian tech companies are increasingly seeking support from U.S. firms, as seen with Nvidia acquiring CentML and Tenstorrent relocating to the U.S. for funding opportunities.

Following the conclusion of Untether AI, its founding team has transitioned to a new venture, Hepzibah AI, based in Toronto, focusing on energy-efficient computing architecture. Allen Lau, co-founder of Two Small Fish Ventures, confirmed in March that his firm invested an undisclosed amount into Hepzibah last year.

As the landscape of AI technology continues to evolve, the fate of Untether AI serves as a reflection of both the challenges and opportunities in the sector, indicating a significant shift in the dynamics of AI hardware development.