Etched valuation jumps to $21 billion in a month

The startup Etched announced on Tuesday a $700 million financing round at a $21 billion valuation, led by the quant fund Jane Street, which evaluated and purchased the company’s hardware. In the current AI bubble, such a valuation jump in that timeframe is unusual; in July the company raised $300 million at a $10.3 billion valuation, and in December its valuation stood at $5 billion.

Etched supplies its technology as complete systems called “frontier inference clusters,” a term comparable to the “AI factories” label used by main competitor Nvidia. According to co-founder and COO Robert Wachen, investor enthusiasm stems from two new components built from scratch to accelerate inference, the computation that follows a user prompt.

Wachen explains that inference consists of two stages. The prefill stage is compute-intensive and parses the prompt and its context, while the decode stage is memory-intensive and generates the tokens the user sees. Etched has developed a low-voltage prefill chip that allows higher transistor density without the thermal issues typical of advanced AI chips, enabling faster token processing. For the decode stage the company created a new type of memory and interconnect called “cluster-scale memory,” which lets many chips connect to a shared memory pool with very low latency. The promised result is higher speed and lower cost.

The company is still fighting an early perception that it “bakes” a particular model into its chips, meaning each chip is custom-built to run a single frontier model. That was the original intent, but Etched’s systems can now run any existing frontier model.

In a post announcing the round, Jane Street wrote: “We evaluated the chip and are pleased with the early results, and Etched’s unique inference approach provides the accuracy required for the fund’s most demanding workloads. We also have an active rack in our data center.” Participants in the round alongside Jane Street include Kleiner Perkins, Sequoia Capital, Andreessen Horowitz, Peter Thiel, Tiger Global, Bain Capital Ventures, Neo, Stripes, Primary, Positive Sum, Diffusion, Argo and Blackstone.