Nvidia Rival Etched Hits $5 Billion Valuation with $1 Billion in AI Chip Orders

AI chip startup Etched has secured a $5 billion post-money valuation following a $500 million funding round led by Stripes, with participation from Peter Thiel and Ribbit Capital. The company has booked $1 billion in forward contract orders for its custom "Sohu" inference systems, signaling massive market demand for alternatives to Nvidia's general-purpose GPUs. Instead of building a chip that can handle everything from gaming to scientific simulation to AI training, Etched built Sohu as a custom ASIC designed to do exactly one thing: run transformer model inference as fast as physically possible. The company claims a single 8-chip Sohu server can process around 500,000 tokens per second running Meta's Llama 70B model — outperforming 160 Nvidia H100 GPUs while using less power and taking up less physical space. Etched was co-founded in 2022 by Harvard dropouts Gavin Uberti and Robert Wachen, who previously served as Thiel Fellows. Back in 2023, they struggled to get investors interested — even with a 30-page memo arguing that AI would eventually need specialized chips. Every major investor they pitched passed, and the company was reportedly operating month-to-month, close to running out of cash. Investors now include Jane Street, Hudson River Trading, Jump Trading, Two Sigma, and AI luminaries including Andrej Karpathy, Geoffrey Hinton, and Fei-Fei Li.