Etched Raises $700M as Valuation Jumps to $21 Billion

AI hardware startup Etched has raised $700 million at a $21 billion valuation, doubling its valuation in about a month as investors back its approach to accelerating artificial intelligence inference.

Jane Street led the new financing after testing Etched’s hardware and purchasing a system for its own data centre. The round follows a $300 million Series C in July that valued Etched at $10.3 billion and a December valuation of $5 billion.

Etched builds systems for AI inference

Etched sells complete AI systems it calls “frontier inference clusters.” The company has designed new hardware for the two primary stages of inference, the computing process used to generate responses after a user submits a prompt.

Co-founder and COO Robert Wachen said inference consists of prefill and decode. Prefill is the compute-intensive stage in which the system processes a prompt and its context. At the same time, decode is the memory-intensive stage responsible for generating the output tokens that form the response.

Etched developed a prefill chip designed to operate at low voltage, which the company says allows more transistors to be packed into the chip while limiting heat. For the decode stage, Etched created a memory architecture and an interconnect, which it calls cluster-scale memory.

According to Wachen, the system allows multiple chips to access a shared memory pool with low latency. Etched says the combination can increase inference speeds while reducing costs.

Jane Street tests Etched hardware

Jane Street said it tested Etched’s chip before investing and was satisfied with the early results. The quantitative trading firm said it now has an Etched rack operating in its data centre to support demanding workloads.

Etched is also seeking to move beyond an earlier perception that its chips are designed around individual AI models. Although that was part of the startup’s original approach, the company says its current systems can run any frontier model.

Etched attracts major technology investors

The latest financing adds to Etched’s rapid increase in private-market value. Its $21 billion valuation is more than four times the $5 billion valuation reported in December.

Other investors in the company include Kleiner Perkins, Sequoia Capital, Andreessen Horowitz, Peter Thiel, Tiger Global, Bain Capital Ventures, Neo, Stripes, Primary, Positive Sum, Diffusion, Argo and Blackstone.

The new capital gives Etched additional backing as it competes in the market for AI inference infrastructure, where performance, memory bandwidth and operating costs are central considerations for companies deploying increasingly demanding AI models.