Etched, a rival to Nvidia’s AI chip, released a progress update on Tuesday after TSMC successfully produced its chip earlier this year. The startup claims to have secured $1 billion in contract orders for its offering: complete systems powered by these chips.

Etched is presently engaged in customer testing of its initial product. These systems are referred to as “frontier inference clusters,” packages that consist of the chips along with specially designed racks and software, all intended to enable frontier models to perform inference more quickly, affordably, and efficiently than competitors, according to Etched. (Inference occurs after a user inputs a prompt — it is currently the largest bottleneck and cost driver for AI firms attempting to serve clients at scale, which is precisely why investors are focusing on those claiming to remedy this issue.)

Founded in 2022, Etched disclosed that it has raised a cumulative total of $800 million so far. The latest tranche was a previously undisclosed $500 million round completed in December, achieving a $5 billion post-money valuation, the firm noted.

The startup has garnered significant interest from a prominent group of investors, such as VentureTech Alliance, Jane Street, Hudson River Trading, Two Sigma, and Ribbit Capital. It has also attracted angel investments from AI luminaries including Andrej Karpathy, Geoffrey Hinton, Fei-Fei Li, Arthur Mensch, and Scott Wu. The cap table features billionaires Stanley Druckenmiller and Peter Thiel as well.

Although the startup’s press statement positions Tuesday’s announcement as Etched “emerging from stealth,” the co-founders — CEO Gavin Uberti and President Robert Wachen — have been discussing their chip ambitions with TechCrunch since 2024. Both left Harvard and became Thiel fellows to establish Etched, as Uberti informed TechCrunch at that time.

By 2024, Etched was already attracting investor interest, having raised over $125 million. However, during Patrick O’Shaughnessy’s “Invest Like the Best” podcast, the founders recounted their struggles in 2023 to engage investors — even with a comprehensive 30-page memo advocating that AI would ultimately require specialized chips instead of just general-purpose GPUs. Every major investor they approached declined. The company was reportedly operating on a month-to-month basis, nearing a cash shortfall in those initial stages.

Today’s investment landscape seems like an entirely different realm. Investors are pursuing every AI-related opportunity, particularly chip technology that accelerates inference. Competitor Cerebras achieved the first major IPO of the year, while AI chip manufacturer Groq recently raised $650 million. Hyperscalers like Amazon, Google, and Microsoft are all developing their own proprietary AI chips. Even OpenAI just announced its inaugural custom chip, created by Broadcom.