Etched, a US-based AI chip startup challenging Nvidia, is in talks for a new funding round that could value the company at about $20 billion, according to reports. The move comes just weeks after the firm disclosed a $5 billion valuation and highlights surging investor interest in specialised AI hardware.
Sources say Etched is pursuing two parallel fundraising tracks: one at roughly $20 billion led by existing backer Jane Street, and another at $10 billion led by Sequoia Capital. The San Jose-headquartered company is negotiating these deals as it rolls out its transformer-only chip, Sohu, designed specifically for AI inference workloads like large language models.
Etched has already raised about $800 million in total funding and reported around $1 billion in booked orders for systems powered by Sohu. The company says it is testing its first product with customers after Taiwan Semiconductor Manufacturing Company (TSMC) successfully produced the chips earlier this year.
Founded in 2022 by three Harvard dropouts, Etched has attracted high-profile investors including Peter Thiel, Stanley Druckenmiller and AI researchers such as Andrej Karpathy and Geoffrey Hinton. The startup aims to compete with Nvidia by offering faster and more efficient chips for running AI models rather than training them.
The funding push reflects strong demand for alternatives to Nvidia’s dominant AI GPUs, especially as hyperscalers and AI startups seek lower-cost inference options. Etched’s rapid valuation jump from $34 million in 2023 to a potential $20 billion shows how quickly capital is flowing into AI infrastructure.
FAQs [Frequently Asked Questions]
Q1: What valuation is Etched targeting in its latest round?
A: Etched is in talks for a funding round at about $20 billion, while also raising a separate round at $10 billion led by Sequoia.
Q2: How much funding and orders has Etched secured so far?
A: The company has raised around $800 million and booked about $1 billion in customer orders for its Sohu-powered AI inference systems.
Q3: What makes Etched’s chip different from Nvidia’s?
A: Etched’s Sohu is a transformer-only chip built for AI inference, aiming for higher speed and efficiency than Nvidia’s general-purpose GPUs.