AI chip startup etched raises 500 million to take on Nvidia

AI chip startup Etched raised about $500 million in a new funding round, according to people familiar with the matter, part of an effort to compete with Nvidia. in the booming market for artificial intelligence processors.

The round, which was led by investment firm Stripes and includes participation from billionaire entrepreneur Peter Thiel, valued the company at $5 billion, said the people, who asked not to be identified because the agreement hasn’t been announced. Positive Sum and Ribbit Capital also invested, they said.

Most Read from Bloomberg

Etched has now raised a total of almost $1 billion, one of the people said. The San Jose, California-based company declined to comment.

Stripes, Positive Sum and Ribbit Capital also declined to comment. A representative for Thiel didn’t immediately respond to a request for comment.

Etched has been working on an AI chip called Sohu, aiming to capitalize on soaring demand for artificial intelligence computing. The startup teamed up with Taiwan Semiconductor Manufacturing Emerging Businesses to produce the chip and has recruited people who have worked at firms such as Cypress Semiconductor. and Broadcom Inc.

Nvidia is the maker of AI accelerators, the chips that help develop and run artificial intelligence models. Its success has prompted a number of startups to challenge its dominance, but they’ve faced an uphill fight.

Nvidia said this month that its demand is only increasing, with the company projecting more than half a trillion dollars in sales from data center operators by the end of 2026.

Thiel and Positive Sum are among Etched’s previous backers, which also included Primary Venture Partners and angel investors such as former Github Chief Executive Officer Thomas Dohmke and ex-Coinbase Inc. executive Balaji Srinivasan.

Most Read from Bloomberg Businessweek