Etched, an emerging competitor in the AI chip sector, has unveiled a significant progress report following the successful manufacturing of its proprietary chip by TSMC earlier this year. The startup announced a substantial achievement, having already secured $1 billion in contract orders for its comprehensive systems, all powered by these advanced chips.
The company is currently engaged in customer testing for its inaugural product, dubbed "frontier inference clusters." These integrated systems comprise Etched's specialized chips, custom-designed racks, and bespoke software. Etched asserts that these clusters are engineered to enable frontier models to execute inference operations with superior speed, reduced cost, and enhanced power efficiency compared to rival solutions. Inference, the crucial process that occurs after a user submits an AI prompt, represents a significant bottleneck and cost center for AI companies striving to deliver services at scale, making solutions in this area particularly attractive to investors.
Founded in 2022, Etched has also disclosed that its total funding to date has reached $800 million. This impressive sum includes a previously unannounced $500 million funding round that concluded in December, valuing the company at $5 billion post-money.
Etched has attracted a distinguished roster of investors, including prominent firms such as VentureTech Alliance, Jane Street, Hudson River Trading, Two Sigma, and Ribbit Capital. Additionally, the startup has garnered angel investments from leading figures in the AI community, including Andrej Karpathy, Geoffrey Hinton, Fei-Fei Li, Arthur Mensch, and Scott Wu. The cap table further boasts investments from billionaires Stanley Druckenmiller and Peter Thiel.
While Etched's recent press release positioned Tuesday's announcement as the company "coming out of stealth," co-founders Gavin Uberti (CEO) and Robert Wachen (President) have, in fact, been discussing their chip development plans with TechCrunch since 2024. Both Uberti and Wachen famously dropped out of Harvard and became Thiel fellows to establish Etched, as Uberti shared with TechCrunch at the time.
By 2024, Etched had already secured over $125 million in funding, placing it firmly on investors' radar. However, during an appearance on Patrick O’Shaughnessy’s “Invest Like the Best” podcast, the founders revealed their struggles in 2023 to generate investor interest. Despite presenting a 30-page memo advocating for the eventual necessity of specialized AI chips over general-purpose GPUs, every major investor they approached declined. In those nascent stages, the company reportedly operated on a month-to-month basis, nearing a critical cash shortage.
Today's funding landscape presents a stark contrast. Investors are aggressively pursuing opportunities across the AI spectrum, with a particular focus on chip technologies that accelerate inference. This trend is underscored by recent market activity, including competitor Cerebras's significant IPO earlier this year, and AI chip maker Groq's recent $650 million funding round. Moreover, hyperscale cloud providers like Amazon, Google, and Microsoft are all developing their own in-house AI chips, and even OpenAI recently announced its first custom chip, developed in collaboration with Broadcom.
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