AI chip startup Etched raised about $500 million in a new funding round to challenge Nvidia in the artificial intelligence processor market, according to people familiar with the matter (14/01).

The agreement has not been announced, and the sources requested anonymity.

The funding reflects strong investor interest in companies developing alternatives to Nvidia’s AI hardware.

Funding Round Values Etched at $5 Billion

The round was led by investment firm Stripes and included participation from billionaire entrepreneur Peter Thiel. The funding values Etched at $5 billion, the people said.

Positive Sum and Ribbit Capital also took part in the round. Etched and the investors declined to comment, while a representative for Thiel did not immediately respond to a request for comment.

Etched Develops Sohu AI Chip With TSMC Partnership

Etched, based in San Jose, California, has now raised nearly $1 billion in total funding. The company is developing an AI chip called Sohu to benefit from the rising demand for artificial intelligence computing.

To manufacture the chip, Etched has partnered with Taiwan Semiconductor Manufacturing Co.’s Emerging Businesses Group.

The startup has also hired employees who previously worked at companies including Cypress Semiconductor Corp. and Broadcom Inc.

Nvidia Dominates the AI Accelerators Market

Nvidia is the leading producer of AI accelerators, which are chips used to develop and run artificial intelligence models. Several startups have attempted to challenge its position, but competition has been difficult.

Earlier this month, Nvidia said demand for its products continues to grow and projected more than $500 billion in sales from data center operators by the end of 2026.

Thiel and Positive Sum were among Etched’s earlier investors, along with Primary Venture Partners and angel investors such as former GitHub Chief Executive Officer Thomas Dohmke and former Coinbase Inc. executive Balaji Srinivasan.

PHOTO: SUBSTACK/ETCHED

This article was created with AI assistance.

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