Etched is weighing fresh investment offers that would value the AI chip startup at double or more its most recent valuation, according to people familiar with the company. The bids under review range from $40 billion from top-tier investors to $50 billion from lesser-known backers, one person said. Talks are at an early stage, so the terms of any deal could still change. Etched declined to comment.
The discussions come only a couple of months after the company raised $700 million at a $21 billion valuation. Raising a similar amount now, the person familiar with the offers said, could give Etched as much as 3.5 years of runway. That cushion would matter because the company is chasing one of the most expensive corners of the AI industry: full AI hardware systems built around its own proprietary chips.
Investors have been drawn to the four-year-old startup as a potential challenger to Nvidia. Quant trading firm Jane Street led the last $700 million round and is also a customer that took delivery of an early system. Etched said in July that it had secured $1 billion in customer orders, including Jane Street's, after manufacturing its test chip at a TSMC factory this summer.
Co-founder and COO Robert Wachen has said investors are enthusiastic because Etched designed two new components from scratch to speed up inference, the computing process that follows a user's prompt. The company claims its chips process more tokens faster and at lower cost than Nvidia's. That edge is attractive to Jane Street, for which even a tiny gain in speed can translate into large profits.
Etched has also drawn notice for its hiring: roughly 15% of its 400-person workforce previously worked at Nvidia, according to the Wall Street Journal. The startup operates a new 10-megawatt datacenter in Silicon Valley and set up a facility in Taiwan to coordinate production near TSMC.
The company's founders have a history of condensed fundraising. Etched announced a $300 million round at a $10.3 billion valuation led by Sequoia in July, then announced the $700 million round at a $21 billion valuation in September. Such back-to-back rounds function as a single financing split into two tranches with separate valuations, a structure that is increasingly common among highly watched startups.
Co-founders Gavin Uberti and Chris Zhu met in an advanced math course at Harvard, where Wachen was Uberti's roommate. All three dropped out to pursue the company.
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