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Nvidia competitor Etched hits $5B valuation, $1B in sales for AI chip
Etched, an Nvidia AI chip competitor, announced progress after TSMC manufactured its chip earlier this year. The startup has secured $1 billion in contract orders for full systems powered by those chips, which it calls "frontier inference clusters." These bundles include custom racks and software designed to run inference—the process after a user submits a prompt—faster, cheaper, and more efficiently than rivals. Inference is currently the biggest bottleneck and cost center for AI companies serving customers at scale. Founded in 2022, Etched revealed it has raised $800 million to date, with an unannounced $500 million round closed in December at a $5 billion post-money valuation. Investors include VentureTech Alliance, Jane Street, Hudson River Trading, Two Sigma, Ribbit Capital, and Stripes (lead). Angel investors include AI heavyweights Andrej Karpathy, Geoffrey Hinton, Fei-Fei Li, Arthur Mensch, and Scott Wu, as well as billionaires Stanley Druckenmiller and Peter Thiel. Co-founders CEO Gavin Uberti and president Robert Wachen—both Harvard dropouts and Thiel fellows—have been discussing their chip plans with TechCrunch since 2024. By then, Etched had raised over $125 million. However, on a podcast, they revealed that in 2023, they struggled to attract investors despite a 30-page memo arguing AI would need specialized chips. Every major investor passed, and the company operated month-to-month, nearly running out of cash. Today, the funding environment is vastly different. Investors chase AI-related chip technology, especially for inference. Competitor Cerebras had the first breakout IPO this year, AI chip maker Groq raised $650 million, hyperscalers like Amazon, Google, and Microsoft build their own AI chips, and OpenAI announced its first custom chip built by Broadcom. Etched is now testing its first product with customers.