The way I read that, I think they're saying hardware acceleration of specific algorithms can be 100 times faster and more efficient than the same algorithm in software on a general purpose processor, and since automated chip design has proven to be a difficult problem space, maybe we should try applying AI there so we can have a lower bar to specialized hardware accelerators for various tasks.

I do not think they mean to say that an AI would be 100 times better at designing chips than a human, I assume this is the engineering tradeoff they refer to. Though I wouldn't fault anyone for being confused, as the wording is painfully awkward and salesy.

That’s my read too, if I’m being generous.

I also think OP is missing the point saying the target applications are too small of a market to be worth pursuing.

They’re too small to pursue any single one as the market cap for a company, but presumably the fictional AI chip startup could pursue many of these smaller markets at once. It would be a long tail play, wouldn’t it?