Etched Reaches $10.3 Billion Valuation After $300 Million AI Chip Funding Round

AI chip startup Etched has raised $300 million in a Series C funding round that values the company at $10.3 billion, marking another major milestone for the three-year-old startup as it seeks to challenge established players in AI hardware.

The funding round was led by Sequoia, with participation from Andreessen Horowitz, SK Hynix, Jane Street and Diffusion Capital, alongside existing investors. Etched’s investor roster also includes Peter Thiel, Andrej Karpathy, Dylan Field, Amjad Masad and several other prominent technology leaders.

The new valuation more than doubles the company’s previous $5 billion valuation from December, when it raised $500 million. According to Etched, the latest financing represents the highest valuation ever achieved in a Sequoia-led Series C round. The announcement follows news last month that the company had successfully manufactured its custom AI chips, begun testing complete systems with customers and secured more than $1 billion in orders.

Building AI hardware for faster inference

Founded in 2022 by Harvard dropouts Gavin Uberti, Robert Wachen and Chris Zhu, Etched launched with the ambitious goal of building chips specifically optimised for modern AI workloads. While the company initially became known for focusing on transformer-based AI models, Wachen said the systems are designed to run a broad range of AI architectures.

According to the company, its hardware supports transformer models, Mixture of Experts (MoE) models such as DeepSeek and Qwen, as well as alternative architectures like Mamba. Rather than selling standalone chips, Etched delivers complete AI systems designed to accelerate inference, the stage where trained AI models generate responses to user prompts.

Wachen explained that inference consists of two stages: prefill, which processes and understands the user’s prompt, and decode, which generates the final output. To improve performance, Etched developed two new hardware components from scratch.

The company said its prefill chip operates at significantly lower voltage than conventional AI processors, producing less heat and allowing more transistors to be integrated onto the chip. For the decode stage, Etched created a new memory and interconnect technology called cluster-scale memory, enabling multiple chips to share memory with low latency while delivering higher performance at lower cost.

Winning over early customers and investors

Despite its technical progress, Etched spent much of its early history facing scepticism from industry observers who questioned whether a startup could successfully build specialised AI hardware. Wachen said many investors and AI researchers only became convinced after seeing private demonstrations of the company’s systems.

He said early demonstrations were viewed by industry figures including Andrej Karpathy, Noam Brown, Geoffrey Hinton and investors who later backed the company.

The startup has grown rapidly from its early days when the founders arrived in Silicon Valley with little more than an idea. Wachen recalled sleeping on the floor of a friend’s empty house after leaving Harvard, while early chip-design servers were installed in an employee’s garage and manually rebooted whenever necessary.

Expanding for large-scale AI deployments

Today, Etched employs around 400 people, operates a 2-megawatt data centre at its headquarters and recently opened a new 80,000-square-foot, 10-megawatt facility in Milpitas, California. The company says it is already running AI inference workloads with some of the world’s largest AI companies as it prepares to scale production of its rack-mounted systems.

Although Wachen acknowledged significant work remains before the systems reach mass production, he said the founders never allowed early scepticism to derail their ambitions.

"We had no idea how hard it was going to be," Wachen said. "I think we still have to be humbled by what it will take to actually get to scale."

Looking back on the company’s journey, Wachen said persistence has been central to Etched’s progress. “It’s come a long way. It’s a very, very different world. But I think, when you really think something’s possible, and you work at it for a long time, you can do it,” he said.