Nvidia Competitor Etched Hits $5B Valuation, $1B in Sales for AI Chip
Etched, a startup competing with Nvidia in the AI chip market, has announced significant milestones in its progress report. The company has successfully manufactured its chip through TSMC and has already booked $1 billion in contract orders for its product, known as ‘frontier inference clusters.’
These clusters are custom-designed systems that include the chips, custom-designed racks, and software, all aimed at helping frontier models run inference faster, more cheaply, and with better power efficiency than rivals. Inference is currently the biggest bottleneck and cost center for AI companies trying to serve customers at scale, which is why investors are paying close attention to anyone promising to solve it.
Etched was founded in 2022 and has attracted a notable group of investors, including VentureTech Alliance, Jane Street, Hudson River Trading, Two Sigma, Ribbit Capital, and Stripes, who led the $500 million round. The company has also secured angel investment from AI heavyweights including Andrej Karpathy, Geoffrey Hinton, Fei-Fei Li, Arthur Mensch, and Scott Wu. The cap table also includes billionaires Stanley Druckenmiller and Peter Thiel.
The startup’s co-founders, CEO Gavin Uberti and president Robert Wachen, have been talking to TechCrunch about their chip plans since 2024. Both dropped out of Harvard and became Thiel fellows to found Etched. By 2024, Etched was already on investors’ radar, having raised more than $125 million. However, the founders revealed that they struggled to get investors interested in 2023, even with a 30-page memo arguing that AI would eventually need specialized chips, not just general-purpose GPUs.
Today’s funding environment looks like a different planet by comparison. Investors are chasing everything AI-related, especially chip technology that speeds up inference. Competitor Cerebras had the first breakout IPO of the year, while AI chip maker Groq just raised $650 million. Hyperscalers Amazon, Google, and Microsoft all build their own in-house AI chips. Even OpenAI just announced its first custom chip, built by Broadcom.
Etched has now raised a total of $800 million to date, with the most recent tranche being an unannounced $500 million round closed in December at a $5 billion post-money valuation. The company is currently in the process of testing its first product with customers and is expected to make significant strides in the AI chip market in the coming months.
