Etched is preparing to ship its first AI inference systems this summer after TSMC manufactured the startup’s initial Sohu chips earlier this year. However, expanding production could prove difficult as Etched competes with larger chip designers for limited capacity at TSMC’s factories in Taiwan.
The four-year-old startup was valued at $5 billion in a funding round announced in January. Etched has raised $800 million across four financing rounds and secured more than $1 billion in customer contracts, according to its official progress update.
Its first chips use TSMC’s N4P manufacturing process. Etched is now testing complete rack-scale systems with customers and has started production ahead of its first planned shipments.
Etched May Eventually Produce Chips in Arizona
Copper Sky Capital, an early investor in Etched, hopes the company will eventually manufacture chips at TSMC’s Arizona facilities. The venture firm invested in Etched’s $120 million Series A in 2024 after founder Jack Selby offered to help the startup establish production links in the state.
Selby founded the Phoenix-based firm in 2021 under the name AZ-VC before renaming it Copper Sky Capital. Its first $115 million fund mainly backed startups in Arizona and the southwestern United States, where Selby believed valuations were lower than those in California, Massachusetts and New York.
The firm later expanded its investment focus to emerging technology centres across the country. It remains interested in hardware and defence companies that could establish manufacturing operations in Arizona.
Selby also serves on the board of the Arizona Commerce Authority, which recruits companies and supports economic development in the state. He said Copper Sky’s connections to Arizona’s semiconductor industry and local TSMC facilities helped the firm gain access to Etched’s competitive funding round.
Copper Sky Seeks a $300 Million Second Fund
Copper Sky is now raising $300 million for its second fund, according to a regulatory filing. The additional capital would allow it to support larger startups across the United States while continuing to pursue companies that could bring manufacturing to Arizona.
Etched develops processors designed specifically for transformer-based AI models rather than general-purpose computing. Its systems combine chips, memory, networking, cooling equipment and software to handle inference workloads from large models and autonomous agents.
The company has opened a factory in Taiwan and built a data centre, testing facility and prototype manufacturing laboratory in San Jose. Etched said its team has grown to more than 400 employees as it prepares to fulfil its customer contracts.
Featured image credits: Magnific.com
For more stories like it, click the +Follow button at the top of this page to follow us.