This article first appeared on GuruFocus.
Investors led by Stripes have supported AI chip startup Etched has received about $500 million in new funding, according to people familiar with the matter, as the company strives to challenge Nvidia (NASDAQ:NVDA) in the growing market for artificial intelligence processors. The funding round included participation from Peter Thiel alongside Positive Sum and Ribbit Capital, and values the San Jose, Calif.-based company at approximately $5 billion, the sources said, emphasizing that the funding had not yet been publicly announced.
Following the raise, Etched secured nearly $1 billion in total funding, according to one of the sources. The company has developed an AI chip known as Sohu, aiming to take advantage of the growing demand for computing power used to train and run artificial intelligence models. Etched has partnered with Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) Emerging Businesses Group to make the chip and hired engineers with prior experience at companies including Cypress Semiconductor and Broadcom.
The funding comes as Nvidia continues to dominate the AI accelerator market, even as new startups try to find alternatives. Nvidia said this month that demand for its products continues to rise and expects data center operators to sell more than half a trillion dollars in sales by the end of 2026. Against this backdrop, Etched’s growing capital base and support from established investors could be seen as a first effort to compete in a market where demand is expanding, but competitive pressure remains intense.