Key facts
- Etched is reportedly in early fundraising talks at valuations of $40 billion to $50 billion.
- The company previously raised $700 million at a $21 billion valuation in September.
- Etched aims to challenge Nvidia by building full AI hardware systems powered by proprietary chips.
- The startup has attracted engineers from Nvidia, with 15% of its workforce having previously worked there.
- Etched claims its chips can process more tokens faster and at a lower cost than Nvidia's.
AI chip startup Etched is reportedly in discussions to raise new funding at a valuation of over $40 billion, more than double its most recent valuation of $21 billion set in September. The company is seeking capital to fund its ambitious plans to build full AI hardware systems powered by its own chips, a move that positions it as a potential challenger to Nvidia.
Sources familiar with the matter indicated that Etched is reviewing bids ranging from $40 billion from top-tier investors to $50 billion from other backers. These talks are in their early stages, and deal terms could change. Etched declined to comment on the fundraising discussions.
The company's aggressive pursuit of funding is driven by the high costs associated with developing AI hardware systems. If Etched secures funding at the higher end of the reported range, it could provide a runway of up to 3.5 years. This rapid pace of fundraising and valuation growth is characteristic of Etched's history, having previously announced a $300 million round at a $10.3 billion valuation in July, followed by the $700 million round at $21 billion in September.
Etched's appeal to investors stems from its potential to disrupt the AI chip market. The four-year-old startup has designed two new components from scratch to accelerate inference, the process of generating responses after a user prompt. The company claims its chips can process more tokens faster and at a lower cost than Nvidia's offerings, making them attractive to customers like quant trading firm Jane Street, which has already received an early system. Etched announced in July that it had secured $1 billion in customer orders, including from Jane Street, following the successful manufacturing of its test chip at a TSMC factory this summer.
Further bolstering investor confidence is Etched's ability to attract talent from Nvidia, with approximately 15% of its 400-person workforce having previously worked at the chip giant. The company also operates a 10-megawatt data center in Silicon Valley and has established a facility in Taiwan to manage production coordination with TSMC. Etched's co-founders, Gavin Uberti and Chris Zhu, met at Harvard and dropped out to pursue the company, with COO Robert Wachen being Uberti's former roommate.