Etched fields funding offers at $40B+ valuation, sources say

Artificial intelligence chip startup Etched is reviewing new investment offers that value the four-year-old company between $40 billion and $50 billion. The early fundraising talks follow a $700 million funding round in September at a $21 billion valuation, and an earlier $300 million round in July at a $10.3 billion valuation led by Sequoia.

Etched focuses on building full artificial intelligence hardware systems using its own proprietary chips, which are designed to speed up inference, the computing process that happens after a user submits a prompt. The company states that its processors can handle more tokens faster and cheaper than Nvidia’s chips.

Venture capital investors are drawn to the startup because it shows potential to challenge Nvidia. Quantitative trading firm Jane Street led Etched's previous funding round and is also a customer that has received an early system. Etched stated in July that it secured $1 billion in customer orders after manufacturing its test chip at a TSMC factory over the summer.

The startup employs about 400 people, with roughly 15 percent previously working at Nvidia, and operates a new 10-megawatt datacenter in Silicon Valley alongside a facility in Taiwan.