AI chip startup Etched secures $500 million in funding to challenge Nvidia

Etched Secures $500 Million in Funding to Challenge Nvidia in AI Chip Market

AI chip developer Etched has successfully obtained approximately $500 million in its latest funding round, according to sources familiar with the transaction. This significant investment is part of the company's strategy to compete with Nvidia in the rapidly expanding artificial intelligence processor sector.

The funding round was spearheaded by Stripes LLC, with notable contributions from billionaire entrepreneur Peter Thiel. The deal, which has not yet been officially disclosed, places Etched's valuation at $5 billion. Additional investors include Positive Sum and Ribbit Capital, as reported by individuals close to the matter.

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With this latest round, Etched's total capital raised approaches $1 billion. The company, headquartered in San Jose, California, has chosen not to comment on the funding. Likewise, representatives from Stripes, Positive Sum, and Ribbit Capital declined to provide statements, and Peter Thiel’s spokesperson did not immediately respond to inquiries.

Etched is developing an AI chip named Sohu, designed to meet the surging demand for advanced artificial intelligence computing. The startup has partnered with Taiwan Semiconductor Manufacturing Co.’s Emerging Businesses Group for chip production and has brought on talent with experience at companies like Cypress Semiconductor and Broadcom.

Nvidia currently dominates the AI accelerator market, producing chips essential for training and running AI models. While several startups have attempted to challenge Nvidia’s leadership, they have encountered significant obstacles.

Earlier this month, Nvidia reported that demand for its products continues to rise, forecasting that sales to data center operators could exceed $500 billion by the end of 2026.

Peter Thiel and Positive Sum have previously invested in Etched, alongside Primary Venture Partners and angel investors such as former Github CEO Thomas Dohmke and ex-Coinbase executive Balaji Srinivasan.

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Source: Bloomberg L.P., 2026