According to sources familiar with the matter, Etched, a startup developing AI chips and competing with Nvidia, will quadruple its valuation to approximately $20 billion in a funding round led by existing investors.

This San Jose, California-based company is benefiting from a frenzy in the venture capital market for artificial intelligence startups. Sources familiar with the matter say the company is raising another round of funding, valued at $10 billion and led by Sequoia Capital. The funding round is not yet finalized, and the terms of the deal are still subject to change.

Such continuous funding rounds have become more common in Silicon Valley amid the AI boom. Startups often sell shares at a certain valuation and then quickly raise more money at a much higher price—reflecting their bargaining power with investors eager to invest in leading AI companies.

Etched has stated that it is developing a chip for running AI models (also known as inference). According to information on the company's website, they are testing their early-stage chip design and working to validate their first product to meet up to $1 billion in real-world customer demand.

While Nvidia remains the leading supplier of AI chips, a wave of startups challenging its dominance is emerging, driven by a number of startups, including Cerebras Systems and Groq. Many startups are working on developing chips specifically designed for inference, including UK startups Fractile and SambaNova. Nvidia's dominance is rooted in the capabilities of its graphics processing units (GPUs) for training AI models.

About Etched

Etched was founded in 2022 by Gavin Ubbetti, Chris Zhu, and Robert Vulcan, all three Harvard University dropouts. Early investors in the company include investment firms Stripes, Peter Thiel, Ribbit Capital, and Primary Venture Partners.

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