"The first half of life may belong to others, lived seeking external validation; but the second half should be returned to oneself, to follow that inner voice."

In 2022, three industry veterans—each with over two decades of semiconductor experience and millions of chips commercially deployed—made a pivotal life decision: they co-founded XAO Computing Technology (Shenzhen) Co., Ltd. (hereinafter referred to as "XAO Group"). Their mission is to deliver market-driven, high-performance, and secure server CPUs and solutions, actively contributing to the "open-source and open second computing plane" initiative in the computing chip sector.

Confronting the technical barriers and first-mover advantages entrenched by industry giants, XAO Group rejects market speculation and pure technological idealism. Instead, it leverages open-source ecosystems and the wave of domestic substitution, filling gaps overlooked by major players with differentiated technology. By breaking through in niche segments, XAO Group is pioneering new pathways for China's semiconductor industry in the post-Moore's Law era.

"Iron Triangle": Aiming High, Moving Broadly  

In 2022, three seasoned experts—a top architect, a mass-production specialist, and an industry resource integrator—gave up stable positions and financially free lives to co-found XAO Group. They could have enjoyed life relying on their substantial prior achievements but chose to embark anew at a critical juncture of industry transformation.

"Time waits for no one!" These four words, spoken by CTO Lin Yun, capture the team's sense of urgency. Looking back at the pivotal year of 2022, from a technical perspective, the increasing complexity of integrated circuit design made it harder to advance traditional Moore's Law, necessitating a shift to systemic innovation rather than merely shrinking process nodes to boost computing power. On the market front, AI-driven emerging application scenarios were exploding. The convergence of these forces created a fleeting window of opportunity.

In the semiconductor industry, a arena full of temptations, XAO Group's "Iron Triangle" surprisingly chose the toughest challenge—the CPU赛道 (CPU track). This decision was driven by two major trends:

1.The Wave of Digital Infrastructure

In 2020, the national initiative for an integrated big data center super-project outlined plans to deploy over 50 million servers in the next decade. CPUs, as core components, account for 34% of total costs, representing a vast market potential.

2.The AI Computing Revolution

In typical AI training tasks, CPUs consume over 50% of power and computing time, with traditional architectures severely limiting computational efficiency. As the AI server market grows at double-digit annual rates, the demand for new CPU architectures is urgent.

With the track set, the startup team faced another crossroads in choosing a technical path. It is well-known that X86 and ARM have long dominated as the two mainstream international architectures. The former is封闭 (closed) to Intel and AMD, while the latter charges significant licensing fees. For startups, achieving rapid commercial closure is key to survival—even for large chips. Thus, opting for a non-mainstream architecture would be commercial suicide.

"Foreign giants have decades of technological accumulation. If you try to catch up relying solely on time, the gap will only widen because technological evolution accelerates. You must stand on the shoulders of giants and trade appropriate investment for time," Lin Yun stated frankly.

At that time, ARM was also seeking breakthroughs, with its global market share jumping from 0.1% in 2018 to nearly 10% in 2022, showing particularly notable growth in China.

This reflected the unique competitive landscape of China's semiconductor industry—neither a "winner-takes-all" nor fully competitive, but a dynamically balanced, layered ecosystem shaped by technological evolution and policy interplay.

Based on this, XAO Group charted a differentiated path of "ARM Architecture + Edge Computing": leveraging ARM's mature ecosystem to quickly enter the market while focusing on the edge computing sector, where giants had yet to establish monopolies, to build a core foothold in vertical industries.

Crafting ARM Cores into Exceptional Flavors

From its inception, XAO Group’s technical and architecture teams engaged in close technical exchanges with ARM. Unlike conventional commercial procurement by other vendors, XAO Group’s IP licensing discussions with ARM involved an extensive process of matching application scenarios with IP versions, and aligning feasibility with IP performance.

ARM follows a fixed technological iteration rhythm, balancing the needs of its major clients with the pace of process advancement. However, these discrete IPs with varied functions are merely components of a fully functional chip, requiring extensive collaboration between self-developed components and cross-component integration. This demands that XAO Group’s team possess comprehensive productization capabilities: maximizing the performance of core computing units while balancing power consumption and chip area, and ensuring high-reliability design. This delicate balance directly determines the competitiveness of the final product.

"Like a Michelin chef treating premium ingredients, ARM and other IP suppliers provide standardized 'main ingredients,' while we need to use self-developed 'seasonings' and precise 'pairing' and 'heat control' to create a chip 'feast' that meets customer needs," Lin Yun explained.

Thus, the team must "translate" customer requirements into technical language understandable by IP suppliers. Over the past two years, XAO Group has proposed numerous features, architectural requirements, IP version delivery demands, and suggestions for future architectural evolution, some of which have been adopted and delivered by ARM and other IP vendors. Additionally, through self-developed "RISC-V accelerators" and "interconnect" capabilities, XAO Group has significantly enhanced the CPU’s comprehensive performance in target scenarios, setting it apart from mere IP integrators.

As a globally leading semiconductor IP supplier, ARM’s core clientele includes tech giants worldwide. XAO Group’s inclusion in ARM’s close collaboration list in China stems from these core competencies, making it one of the few companies in China capable of engaging in deep technical dialogues with ARM architects.

In the fourth quarter of 2024, XAO Group successfully secured licensing for ARM’s latest-generation core, which is highly suited for cloud computing scenarios. Currently, XAO Group is the first licensee in mainland China for this server-oriented architecture in the Server segment.

Lin Yun emphasized that XAO Group’s strength lies in SoC (System-on-Chip) architecture design and delivery capabilities. ARM IP cores are merely a critical piece of the company’s technological puzzle. Thus, the team has invested heavily in detailed design work across specific application scenarios, IP coordination, reliability design, engineering processes, and solutions, "striving to craft the most premium ingredients into an exceptional flavor."

Currently, XAO Group’s first ARM CPU product is in intensive delivery phases and can already run operating systems and virtual machine demos on test platforms. This marks the comprehensive completion of front-end design and entry into the back-end physical implementation stage.

It is reported that XAO Group plans to launch its first commercial CPU chip in 2026. The company has already established strategic partnerships with several domestic server manufacturers and is concurrently enhancing its developer community and industry solutions to accelerate the transformation of technological achievements into large-scale applications.

The Technological Long March of the "Second Computing Plane"

In recent years, the chip industry has moved away from an era of capital "flood irrigation," with investment logic shifting from "casting a wide net" to "focused precision." On June 5 of this year, XAO Group defied the trend by announcing the completion of its Pre-A round of funding, with Nanjing Innovation Investment Group as one of the co-lead investors.

Lin Yun noted that investors prioritize track value, industry positioning, and team capabilities, but it is evident that they now favor projects driven by both "technology + scenario" dual engines, with significantly reduced tolerance for pure technological idealism or market speculation.

Hu Yong, General Manager of the Fifth Investment Department at Nanjing Venture Capital Group, confirmed this perspective: "The server CPU track that XAO Group focuses on has high technical barriers and vast market potential. Fortunately, the company has already established deep collaborations with several leading domestic industry players, reducing the risk of product definition偏差 (deviation). We hope the company continues to steady its步伐 (pace), achieves first-time success in subsequent new product development, and accelerates market expansion."

It is worth mentioning that the funds from this round will not only be used for the delivery of CPU products adopting ARM's latest IP but will also be allocated to RISC-V microarchitecture design exploration. Moreover, XAO Group has already established collaborations with top-tier domestic teams in the RISC-V domain.

Academician Ni Guangnan once asserted: "RISC-V is not just a technological innovation but a global transformation that will shape the future of computing architecture." Lin Yun deeply agrees: "Whether China can lead the ecosystem in the wave of AI + open-source chips depends on its ability to translate RISC-V's technological openness into rule-making power." Reportedly, the industry must持续发力 (persistently efforts) in chip design, software ecosystems, toolchain optimization, and standardization advancement. Only when RISC-V chips enable customers to "seamlessly switch," achieving the same ecosystem level as X86 and ARM, can RISC-V truly enter the global mainstream market.

In this semiconductor marathon, XAO Group has chosen "technological realism" to address challenges: embracing ARM's ready-made ecosystem while betting on RISC-V's future potential; pursuing commercial落地 (landing) while坚持 (adhering to) long-term innovation.

The company has already formulated a clear "three-phase" strategy:Short-term: Achieve commercial closure based on ARM's ecosystem as soon as possible, generating rapid cash flow.Medium-term: Collaborate with the RISC-V alliance to break the monopoly of traditional giants through open-source ecosystems.Long-term: Break through instruction set and microarchitecture innovation, defining the future with autonomous architecture.

"XAO Group proposes supporting the 'creation of an open-source second computing plane,' similar to ARM's market positioning in the X86-dominated landscape. This is an intermediate state necessary for enterprise growth," Lin Yun stated with determination. "The road ahead may be smooth or fraught with challenges, but we remain anchored to one ultimate goal: embracing the open-source ecosystem, supporting AI for societal benefit, and developing accessible and affordable computing chips based on ARM and RISC-V instruction sets."

As the team often says internally: "Beyond 'Stay hungry, stay foolish,' we must also 'Stay positive'—the industry needs optimistic long-termists."

Source: Venture Capital Group
Reviewed by: Xue Yao
Published by: You Yi