AI chip startup Etched doubles valuation to $21 billion in under a month

Jane Street-backed Etched said on Tuesday ​its valuation more than doubled ​in less than a month to $21 billion, as investors ​bet on growing demand for specialized chips used to run artificial intelligence models.

The San Jose, California-based company raised $700 million, with trading firm Jane Street continuing its backing ‌by leading ⁠the round, ⁠joined by Kleiner Perkins, Sequoia, Andreessen Horowitz and Tiger Global, among others.

The funding ​highlights growing investor interest in the infrastructure needed to run AI models, particularly as ​demand surges for inference - the process of using trained AI models to generate responses.


Etched builds specialized AI inference systems designed to make models faster and cheaper to run, joining a growing ⁠group of ‌startups seeking to challenge Nvidia's dominance in the AI chip market.

"Inference is becoming one of the most important infrastructure ⁠markets in AI, and the winners will be measured ​by tokens per dollar and per watt," said ​Kleiner Perkins Managing Partner Mamoon Hamid.

Etched, with more than 400 employees and a working chip, was valued at $10.3 billion in a Series C round in July.

"Etched has impressive technology and serious customer interest, but semiconductor history is littered with brilliant chips that never became great businesses," ‌said Michael Ashley Schulman, partner at Cerity Partners.

"The market is fighting to estimate the size of the opportunity, the ​scarcity of ​a proven alternative ⁠to Nvidia, and a billion dollars in customer contracts (but with barely any trailing financials to evaluate)," Schulman added.

Jane Street is also Etched's first customer and ​received its first rack last month, with the trading firm now deploying the technology in its workloads.

Etched said it has secured more than $1 billion in customer contracts across public and private AI companies as well as cloud providers.