Power Struggle: A $15 Million Bet on Fixing AI's Energy Problem

The race to build bigger artificial intelligence systems is hitting a wall, and it's not made of silicon. It's about electricity. As global data center power demand skyrockets, a critical bottleneck has emerged in the inefficient conversion of power before it reaches the chips. This is where investors are placing new bets.

Peak XV Partners has led a $15 million Series A investment in C2i Semiconductors, a two-year-old Indian startup with a total of $19 million raised. Cofounded by former Texas Instruments executives, C2i is tackling a hidden cost: the roughly 15-20% of energy lost as high-voltage power is stepped down thousands of times within a data center to feed power-hungry AI processors.

"What used to be 400 volts has already moved to 800 volts, and will likely go higher," said C2i's co-founder and CTO, Preetam Tadeparthy. His company is redesigning power delivery as a single, integrated system—from the data center's power bus right to the GPU. They claim this approach can cut end-to-end losses by about 10%, saving an estimated 100 kilowatts for every megawatt consumed, which directly improves a facility's bottom line.

For investors, the math is compelling. "After the upfront capital investment in servers and facilities, energy costs become the dominant ongoing expense," said Rajan Anandan, Managing Director at Peak XV. "If you can reduce energy costs by, call it, 10 to 30%, that’s like a huge number. You’re talking about tens of billions of dollars."

The startup's claims face imminent testing. Its first two silicon designs are expected back from fabrication between April and June, with performance validation from interested data center operators to follow. Based in Bengaluru with a team of 65 engineers, C2i is also establishing customer operations in the U.S. and Taiwan.

The move reflects a maturation of India's semiconductor design ecosystem. Anandan compares it to the early days of Indian e-commerce, fueled by deep engineering talent and government incentives that lower the cost of developing chips. C2i's attempt to redesign a long-entrenched part of the data center stack is a high-stakes gamble. As Anandan put it, "We’ll know in the next six months."