San Jose AI chip startup Etched raises $500 million to take on Nvidia

"AI chip startup Etched raised about $500 million in a new funding round, according to people familiar with the matter, part of an effort to compete with Nvidia Corp. in the booming market for artificial intelligence processors. The round, which was led by investment firm Stripes and includes participation from billionaire entrepreneur Peter Thiel, valued the company at $5 billion, said the people"

"Etched has been working on an AI chip called Sohu, aiming to capitalize on soaring demand for artificial intelligence computing. The startup teamed up with Taiwan Semiconductor Manufacturing Co.'s Emerging Businesses Group to produce the chip and has recruited people who have worked at firms such as Cypress Semiconductor Corp. and Broadcom Inc. Nvidia is the leading maker of AI accelerators, the chips that help develop and run artificial intelligence models."

"Its success has prompted a number of startups to challenge its dominance, but they've faced an uphill fight. Nvidia said this month that its demand is only increasing, with the company projecting more than half a trillion dollars in sales from data center operators by the end of 2026. Thiel and Positive Sum are among Etched's previous backers, which also included Primary Venture Partners and angel investors such as former Github Chief Executive Officer Thomas Dohmke and ex-Coinbase Inc. executive Balaji Srinivasan."

Etched secured roughly $500 million in a funding round led by Stripes with participation from Peter Thiel, Positive Sum and Ribbit Capital, valuing the company at $5 billion. The company has now raised nearly $1 billion in total. Etched is developing an AI accelerator called Sohu to meet rising demand for AI computing and partnered with TSMC's Emerging Businesses Group for manufacturing. The startup recruited engineers from firms including Cypress Semiconductor and Broadcom. Nvidia currently dominates the AI accelerator market and projects more than $500 billion in data-center sales by the end of 2026, creating a steep competitive challenge. Earlier backers include Primary Venture Partners and angels Thomas Dohmke and Balaji Srinivasan.

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