Barely two months after locking in $700 million at a $21 billion valuation, AI chip startup Etched now fields unsolicited term sheets valuing the company between $40 billion and $50 billion. The pace signals investor desperation to back any credible challenger to Nvidia’s dominance.
The four-year-old company declined comment. Yet people with direct knowledge of the discussions confirmed that top-tier venture firms have floated $40 billion offers while lesser-known backers pushed as high as $50 billion. Talks remain preliminary, so any final deal could shift.
Why the frenzy? Etched builds full AI hardware systems around proprietary chips designed from scratch to accelerate inference, the computation that occurs after a user submits a prompt. The company claims its processors handle more tokens faster and cheaper than Nvidia’s offerings. For quantitative trading giant Jane Street, which led the last round and took delivery of an early system, microscopic speed gains translate into enormous profits.
That customer overlap matters. Jane Street serves as both investor and buyer, a rare validation in the chip world. Etched reported $1 billion in customer orders by July, after fabricating its test chip at TSMC over the summer.
Meanwhile, the talent war adds another layer. Roughly 15% of Etched’s 400 employees previously worked at Nvidia, according to the Wall Street Journal. The startup also operates a 10-megawatt data center in Silicon Valley and opened a Taiwan facility to coordinate manufacturing near TSMC.
Cofounders Gavin Uberti and Chris Zhu met in an advanced Harvard math course. COO Robert Wachen roomed with Uberti, and all three dropped out to build the company.
Back-to-back rounds with sharp valuation jumps have become standard among buzzy startups. Etched announced $300 million at a $10.3 billion valuation in July, followed by the $700 million round at $21 billion in September. A new raise could provide up to 3.5 years of runway as the company pushes deeper into full-system AI hardware.
