AI chip startup Etched is fielding new investment offers at a valuation of $40 billion or more, according to a person familiar with the company. The talks are early and terms could change; Etched declined to comment. The development comes just months after the company raised $700 million at a $21 billion valuation.
Etched is pursuing a capital-intensive segment of AI: building full hardware systems around its own proprietary chips. The company says its processors are designed from scratch to speed up inference, the computation that follows a user prompt, and can handle more tokens faster and at lower cost than Nvidia's chips. That speed advantage is particularly valuable to customers like Jane Street, the quant trading firm that led the last round and has taken delivery of an early system. Etched said in July it had secured $1 billion in customer orders.
The startup has also drawn talent from Nvidia, with about 15% of its 400-person workforce having previously worked at the chip giant, according to The Wall Street Journal. It operates a 10-megawatt data center in Silicon Valley and a facility in Taiwan near TSMC. If Etched raises as much as its last round, the person said, it could gain as much as 3.5 years of runway. The company has a history of rapid valuation jumps: a $300 million round at $10.3 billion in July, followed by the $700 million round at $21 billion in September.