Etched draws funding offers at over $40 billion valuation

### AI Chip Startup Etched Attracts Funding Offers at Valuations of Up to $50 Billion

AI chip startup Etched is reportedly receiving investment proposals that could value the company between $40 billion and $50 billion, marking another dramatic increase in its valuation only weeks after it reached $21 billion.

The San Jose, California-based company is considering offers from potential investors ranging from approximately $40 billion from major investment firms to as much as $50 billion from lesser-known backers, according to TechCrunch. The report, published October 5, cited people familiar with the discussions.

The negotiations are still in an early stage, and the terms could change as discussions progress. There is also no guarantee that Etched will complete a new financing round. The company declined to comment on the reported talks.

If completed, the financing would represent another substantial increase in Etched's valuation. The startup raised $700 million in September at a $21 billion valuation, just two months after securing $300 million at a $10.3 billion valuation in July.

That rapid sequence of funding rounds has made Etched one of the most closely watched startups in the increasingly competitive AI semiconductor industry.

Etched is developing specialized chips designed primarily to accelerate AI inference, the stage in which an AI system processes a user's request and generates a response. The company is positioning its technology as an alternative to Nvidia's widely used AI accelerators.

The startup argues that its hardware can process more tokens at a lower cost than competing Nvidia systems in certain workloads. Its approach is focused on specialized components designed to improve inference performance as AI companies increasingly operate larger and more computationally demanding models.

The economics of inference have become increasingly important across the AI industry. As companies deploy AI agents and models to serve millions of users, the computing resources required to generate responses can become a significant operating expense.

Etched has also attracted investor attention through early customer activity. Quantitative trading firm Jane Street led the company's $700 million September financing and is also an Etched customer that has received an early version of the company's hardware.

The startup said in July that it had obtained more than $1 billion in customer orders after manufacturing its test chip through Taiwan Semiconductor Manufacturing Co., or TSMC.

Etched has expanded rapidly alongside its fundraising. The company now has approximately 400 employees, with about 15% reportedly having previously worked at Nvidia, according to reporting cited by TechCrunch.

The startup has also established infrastructure to support its hardware development and deployment. It operates a 10-megawatt data center in Silicon Valley and has a facility in Taiwan that helps coordinate manufacturing activities close to TSMC.

Etched was founded by Gavin Uberti, Chris Zhu and Robert Wachen, who left Harvard to pursue the semiconductor startup. The company has since rapidly expanded its capital base as demand for AI computing infrastructure has intensified.

The reported funding discussions come as investors increasingly look beyond Nvidia for companies that could benefit from the rapid growth of AI workloads. While Nvidia remains a dominant supplier of AI computing hardware, startups and established chipmakers are developing specialized alternatives targeting specific stages of AI processing.

Etched's previous funding rounds have attracted prominent investors, including Jane Street, Kleiner Perkins, Sequoia Capital, Andreessen Horowitz and Tiger Global.

Its rapid valuation growth illustrates the premium investors are placing on AI infrastructure companies that can demonstrate potential improvements in computing performance and cost efficiency.

If Etched secures financing at or near a $40 billion valuation, it would represent a substantial increase from its $10.3 billion valuation in July and $21 billion valuation in September.

However, the reported offers remain proposals rather than completed financing. The eventual size of any new investment, the terms and Etched's final valuation could all differ from the figures currently being discussed.