According to people familiar with the matter, artificial intelligence chip design company FuriosaAI plans to raise up to $500 million in a pre-IPO funding round to challenge industry giant NVIDIA (NVDA.US).

The Seoul-based startup has reportedly appointed Morgan Stanley and Mirae Asset Securities as joint advisors for its Series D round, targeting a fundraising amount between $300 million and $500 million.

The raised capital will be used to fund the mass production of FuriosaAI's second-generation RNGD chip, support global business expansion, and finance the research and development of its third-generation chip.

Sources also indicated that the startup is planning for an initial public offering as early as 2027.

One source mentioned that FuriosaAI is set to receive its first batch of mass-produced RNGD AI chips from Taiwan Semiconductor Manufacturing Company (TSM.US) later this month.

Founded in 2017 by industry veteran June Paik, who previously worked at Samsung Electronics and AMD, FuriosaAI specializes in developing high-efficiency AI inference chips.

The company claims its RNGD chip (pronounced "renegade") delivers 2.25 times better inference performance per watt compared to traditional graphics processing units.

In July of last year, FuriosaAI secured LG as its first major customer, marking a significant milestone that coincides with a booming period for AI hardware investments.

This development follows other notable transactions in the sector, including Groq Inc.'s $750 million funding round last year prior to its strategic partnership with NVIDIA, Cerebras Systems Inc.'s pursuit of $1 billion in new funding at a $22 billion valuation, and Etched's completion of a $500 million financing round.