By Max A. Cherney and Krystal Hu
SAN FRANCISCO, Oct 9 (Reuters) – Six-month-old microchip startup Nuvacore, which does not yet have a product, is raising hundreds of millions of dollars at a roughly $2.5 billion valuation to develop a new central processor designed for data centers, according to two people familiar with the fundraising.
Nuvacore is seeking to raise the funds as the appetite for central processors has swollen due to the thirst for data-crunching capacity to power chatbots such as Anthropic’s Claude. CPUs perform vital functions as traffic controllers for Nvidia’s AI chips and run autonomous AI software known as agents.
The roughly $2.5 billion valuation has not been previously reported. The Information reported previously that Nuvacore was raising $200 million or more. The funding round has not closed, and the people cautioned that the valuation and size of the capital raise could change.
Intel and Advanced Micro Devices, which use x86 technology, have long dominated the data center CPU market. Companies designing chips based on Arm’s technology — found inside Amazon and Microsoft custom CPUs — have also attempted to make inroads in the data center market.
Nuvacore has not yet developed a product. Last month, it described an unconventional design strategy: to build the core functionality of the chip before committing to an architecture such as the x86 used by Intel and AMD, or Arm, which is used in most mobile phones.
The design strategy will allow the company’s engineers to avoid the limitations and requirements of specific architectures and optimize a design for the type of computations that are most common in data centers and AI infrastructure, Nuvacore said.
Nuvacore declined to comment.
The San Jose, California-based startup was founded by renowned engineers Gerard Williams, John Bruno and Ram Srinivasan. Williams, a former Apple executive, sold a prior startup called Nuvia to Qualcomm for $1.4 billion in 2021.
Nuvacore earlier this year announced a seed funding round led by Sequoia Capital. It joins a series of young chip startups that have sought billion-dollar valuations before releasing a product as investor appetite for AI hardware companies has returned.
Over the past decade, Silicon Valley venture capital firms have taken much less interest in hardware than software because of hardware’s longer development cycles, higher capital needs and the industry’s cyclical demand.
Investors put about $10.7 billion into semiconductor startups in the first five months of 2026, already outpacing the $12.2 billion raised globally in all of 2025, according to Crunchbase data.
Earlier this year, Intel said it could not manufacture enough chips to meet demand, and was able to sell products it had previously determined were too faulty for sale. AMD also described swelling CPU sales in a recent results conference call with analysts.
Shares in both companies have risen more than 180% this year.
Nvidia launched a CPU called Vera this year. CEO Jensen Huang has said the company expects to sell $20 billion worth of its Vera CPU in this fiscal year, which ends in January.
(Reporting by Max A. Cherney and Krystal Hu in San Francisco; editing by Peter Henderson and David Gaffen)
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