AI chip startup Etched fields offers valuing it at $40 billion or more

Etched, a four-year-old AI chip startup, is reviewing investment offers that value the company at $40 billion or more — roughly double the valuation it secured only a couple of months ago, TechCrunch reports.

According to one person familiar with the company, the bids range from $40 billion from top-tier investors to $50 billion from lesser-known backers. The talks are at an early stage, and the terms of any deal, if one happens, could still change. Etched declined to comment.

The most expensive corner of AI

Etched is not just designing chips. It builds complete AI hardware systems powered by its own proprietary processors, one of the costliest segments of the AI industry to operate in. According to TechCrunch's source, raising as much money as in its previous round would give the startup a cushion of as much as 3.5 years of runway.

The quick return to the fundraising market fits an established pattern. Etched announced a $300 million round at a $10.3 billion valuation led by Sequoia in July, followed by a $700 million round at a $21 billion valuation in September, with quant trading firm Jane Street leading. TechCrunch notes that back-to-back rounds like these — effectively a single financing split into two tranches with separate valuations — are increasingly common among the buzziest startups.

The case against Nvidia

Investor enthusiasm rests on Etched's claim that its chips process more tokens, faster and at lower cost, than Nvidia's. Co-founder and COO Robert Wachen previously told TechCrunch that the company designed two new components from scratch to accelerate inference — the computing step that happens after a user submits a prompt.

That pitch has translated into demand. In July, Etched said it had already secured $1 billion in customer orders, including the one from Jane Street, after manufacturing its test chip at a TSMC factory earlier in the summer. Jane Street, which led the September round, is also a customer and has taken delivery of an early system — significant because a microscopic advantage in speed can yield massive profits for a quant trading firm.

Etched has also drawn talent from the incumbent: roughly 15% of its 400-person workforce previously worked at Nvidia, according to The Wall Street Journal. On the operational side, the company runs a new 10-megawatt data center in Silicon Valley and has opened a facility in Taiwan to coordinate production near TSMC.

The origin story is a familiar one for the industry: co-founders Gavin Uberti and Chris Zhu met in an advanced math course at Harvard, and Robert Wachen was Uberti's roommate before they dropped out to pursue the company.

Why it matters

The speed of the repricing tells the story: $10.3 billion in July, $21 billion in September, offers above $40 billion now. Doubling a valuation within a matter of months illustrates how ferociously investors are bidding for exposure to any credible challenger to Nvidia, whose dominance in AI accelerators has made alternative silicon one of the most contested bets in venture capital.

The scale of the raises is also a requirement, not just a symptom of hype. Designing custom chips, paying TSMC for production and operating data centers costs billions, and only startups with enormous cash cushions can stay in the race. If the current talks hold, Etched would rank among the largest private companies in the AI sector. The usual caveats apply, though: the talks are early, terms can shift, and Etched itself is not commenting.