Etched: Nvidia Challenger Raises $500 Million – Peter Thiel Involved
Etched is making waves in the competition for specialized AI hardware: The AI chip startup is raising around $500 million in new capital, according to Bloomberg, bringing the company to a valuation of nearly $5 billion. Total funding is approaching the billion-dollar mark. And Etched’s first powerful chip is still in development.
Peter Thiel Invests Again in AI Chips
The funding round is led by Stripes, supported by Positive Sum, Ribbit Capital, and Peter Thiel, among others. Just in November, the latter warned of an AI bubble and simultaneously dissolved his stake in chip giant Nvidia. Just a few months later, the tech billionaire is now investing in a rising competitor.
Previous backers include Primary Venture Partners as well as angel investors like GitHub CEO Thomas Dohmke and former Coinbase manager Balaji Srinivasan.
Harvard Dropouts Build Transformer Chip
Strategically, Etched positions itself as a specialized counterweight to Nvidia’s market dominance in AI chips. While Nvidia primarily relies on universally applicable GPUs, Etched pursues a focused approach: At the center is Sohu, Etched’s custom-built AI accelerator. Its own chips are designed exclusively for transformer-based AI models. This consistent specialization is intended to enable significant efficiency gains.
Chris Zhu, Gavin Uberti, and Robert Wachen founded Etched in 2022 after leaving Harvard with the clear goal of establishing themselves as a chip manufacturer. CTO Mark Ross later joined the team.
David vs. Goliath
Nvidia expects cumulative revenues exceeding $500 billion by the end of 2026. The company’s dominance remains unmatched. No other chip manufacturer currently comes close to the combination of hardware performance, software ecosystem, and market penetration.
But Etched’s strategy relies on specialization in the AI chip segment. If the Sohu AI chip lives up to expectations, Etched could carve out a valuable niche in an overcrowded yet rapidly growing market.
