A little-known AI chip startup just secured $1 billion in sales before its first product even shipped

Etched, a two-year-old company taking on Nvidia, revealed it has $1 billion in contracts for its AI systems, all before finishing tests on its first chip. The startup also shared it raised $500 million late last year at a $5 billion valuation, bringing its total funding to $800 million. Its backers include major trading firms like Jane Street and Hudson River Trading, plus AI pioneers like Geoffrey Hinton and Andrej Karpathy.

The company’s product is a full system, not just a chip. It combines custom-designed hardware and software to speed up AI inference, the process where models generate responses to user prompts. This is currently the most expensive and slowest part of running AI at scale, which is why investors are betting big on anyone who can improve it.

Etched’s rapid rise is a sharp turn from its early days. In 2023, founders Gavin Uberti and Robert Wachen struggled to get investors interested, even with a detailed pitch arguing specialized chips would be essential for AI. Now, the funding environment has flipped, with investors chasing anything that can challenge Nvidia’s dominance in AI hardware.

Etched was founded in 2022 by Uberti and Wachen, both Harvard dropouts who became Thiel Fellows. The company is part of a wave of startups building AI chips tailored for specific tasks, unlike Nvidia’s general-purpose GPUs. Competitors like Cerebras and Groq have also seen major funding rounds recently, while tech giants like Amazon, Google, and Microsoft are developing their own in-house AI chips.

You should care because faster, cheaper AI inference means better and more accessible AI tools for everyone. If startups like Etched succeed, they could break Nvidia’s grip on the market, leading to more competition, lower costs, and faster innovation. But there’s a risk too: if these new chips don’t deliver on their promises, the AI boom could hit a speed bump.

Next, watch for Etched’s first systems to hit the market and see if they live up to the hype. The company will need to prove its technology can outperform Nvidia’s in real-world use, not just on paper. Also keep an eye on how Nvidia and other big players respond to this growing competition.

What do you think will be the bigger game-changer for AI: specialized chips like Etched’s or the custom chips being built by tech giants?

Can a startup really challenge Nvidia’s dominance, or is this just hype?

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Filed under: AI, AIchips, Etched, TechNews, Startups