Nvidia AI chip competitor Etched released a progress report on Tuesday after TSMC successfully manufactured the chip earlier this year. The company said it has already booked $1 billion in contract orders for its products, full systems powered by these chips.
Etched is currently testing its first product with customers. The company calls these systems “Frontier Inference Clusters,” bundles that include chips and custom-designed racks and software, all built to allow Frontier models to run inference faster, cheaper, and with greater power efficiency than competitors, Etches claims. (Inference is what happens after a user submits a prompt. Inference is currently the biggest bottleneck and biggest cost center for AI companies looking to serve customers at scale. That’s exactly why investors are focused on those who promise to solve it.)
Etched, which was founded in 2022, also revealed that it has raised a total of $800 million to date. The latest tranche is an undisclosed $500 million round that closed in December at a post-money valuation of $5 billion, according to the company.
The startup has also attracted a group of prominent investors, including VentureTech Alliance, Jane Street, Hudson River Trading, Two Sigma, Ribbit Capital, and Stripes, which led a $500 million round. The company has also secured angel investment from heavyweights in the AI world, including Andrei Karpathy, Jeffrey Hinton, Feifei Li, Arthur Mensch, and Scott Wu. The cap table also includes billionaires Stanley Druckenmiller and Peter Thiel.
Although the company’s press release calls Tuesday’s announcement a “coming out of stealth” for Etched, co-founders CEO Gavin Uberti (pictured above) and president Robert Wachen have actually been discussing the company’s chip plans with TechCrunch since 2024. Both dropped out of Harvard University, became Thiel Fellows and founded Etched, Uberti told TechCrunch at the time.
By 2024, Etched had already attracted the attention of investors, having raised more than $125 million. But the founders said on Patrick O’Shaughnessy’s Invest Like the Best podcast that they struggled to attract investor interest, even though they wrote a 30-page memo in 2023 arguing that AI would eventually require specialized chips, not just general-purpose GPUs. All of the major investors they proposed passed. Reportedly, in its early days, the company was on the verge of running out of cash from month-to-month operations.
Today’s funding environment is like another planet by comparison. Investors are chasing all things AI-related, especially chip technology that speeds up inference. Competitor Cerebras had its first landmark IPO of the year, and AI chip maker Groq just raised $650 million. Hyperscalers Amazon, Google, and Microsoft all develop their own AI chips in-house. Even OpenAI just announced its first custom chip developed by Broadcom.
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