Nvidia rival Etched reaches $5 billion valuation, $1 billion sales for AI chip

Etched, a competitor to Nvidia’s AI chip, issued a progress report on Tuesday, after TSMC successfully manufactured its own chip earlier this year. the It says startup It has already booked $1 billion worth of contract orders for its product: entire systems powered by these chips.

Etched is currently in the process of testing this first product with customers. These systems are called “frontier inference clusters,” which are packages that include the chips along with custom-designed racks and software, all designed to help frontier models run inference faster, at a lower cost, and with better power efficiency than competitors, Etched claims. (Heuristics is what happens after a user submits a claim — it’s currently the biggest bottleneck, and biggest cost center, for AI companies trying to serve customers at scale, which is exactly why investors are interested in anyone who promises to solve this problem.)

Etched, which was founded in 2022, also revealed that it has now raised a total of $800 million to date. The last tranche was an undisclosed $500 million round that closed in December at a post-cash valuation of $5 billion, the company said.

The startup has attracted a notable group of investors as well, including VentureTech Alliance, Jane Street, Hudson River Trading, Two Sigma, and Ribbit Capital. It has also secured angel investments from heavyweights in the AI ​​space, including Andrei Karpathy, Geoffrey Hinton, Fei-Fei Li, Arthur Mensch, and Scott Wu. The cap table also includes billionaires Stanley Druckenmiller and Peter Thiel.

Although the startup’s press release portrays Tuesday’s announcement as Etched “coming out of stealth,” the co-founders — CEO Gavin Uberti and President Robert Washen — were actually… Talk to TechCrunch About their chip plans from 2024. They both dropped out of Harvard and became colleagues of Thiel to found Etched, Uberti told TechCrunch at the time.

By 2024, Etched was already on investors’ radars, having raised more than $125 million. But on Patrick O’Shaughnessy”Invest like the bestPodcast, the founders said they struggled in 2023 to attract investor interest — even with a 30-page memo arguing that AI would eventually need specialized chips, not just general-purpose GPUs. Every major investor they brought in was successful. The company was reportedly running month-to-month, on the verge of running out of cash, in those early days.

Today’s finance environment seems like a different planet by comparison. Investors are chasing all things AI, especially chip technology that speeds up reasoning. Competitor Cerebras had First breakthrough IPO This year, while artificial intelligence chip maker Groq took home the Best Company award It just raised $650 million. Hyperscalers Amazon, Google, and Microsoft are all building their own in-house AI chips. Even OpenAI just announced it The first custom chipbuilt by Broadcom.