Etched Raises $500 Million to Challenge Nvidia

This article first appeared on GuruFocus.

AI chip startup Etched has raised $500 million in fresh funding as it looks to carve out a place in a market largely dominated by Nvidia (NASDAQ:NVDA), according to a Bloomberg report.

The round was led by Stripes and included backing from Peter Thiel, along with Positive Sum and Ribbit Capital, valuing the San Jose based company at $5 billion. The raise follows Etched's $120 million Series A in 2024 and gives the company additional firepower to scale its custom AI hardware ambitions.

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Founded in 2022, Etched is developing application specific integrated circuits designed solely for transformer based AI models. Its flagship chip, Sohu, is slated for production at Taiwan Semiconductor Manufacturing using a 4nm process and is built to run models from major AI developers more efficiently than general purpose GPUs.

CEO Gavin Uberti has said Sohu can deliver significantly higher performance and lower costs for transformer workloads, positioning it as a specialized alternative for enterprise AI users. rising demand for AI compute is opening the door for new chip designs that prioritize efficiency and cost alongside raw performance. Investors will be watching whether Etched can translate its technical claims into real world adoption.

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