Nvidia Challenger Etched Reaches $5 Billion Valuation as AI Chip Race Intensifies
Etched, the Silicon Valley startup building specialized chips for running AI transformer models, has reached a staggering $5 billion valuation after hitting $1 billion in annual sales, according to sources familiar with the matter. The milestone puts the young company firmly on the radar of the global semiconductor industry — including the Netherlands, where chip equipment giant ASML supplies the lithography machines that make advanced chip manufacturing possible.
Founded in 2022 by Gavin Uberti and Chris Zhu, Etched took a radical bet: designing a chip optimized exclusively for transformer-based AI models rather than building a general-purpose AI accelerator. That bet appears to be paying off handsomely. The company’s first production chip, code-named “Sohu,” reportedly outperforms Nvidia’s H100 by a factor of 10 to 20 on inference workloads for large language models while consuming significantly less power.
The Dutch Semiconductor Connection
While Etched is headquartered in San Francisco, the ripple effects of its success extend directly to the Netherlands. ASML, based in Veldhoven, is the world’s sole supplier of extreme ultraviolet (EUV) lithography machines — the multi-million-euro equipment required to manufacture cutting-edge chips at the nanometer scale. Every AI chip, whether from Nvidia, Etched, or any other competitor, depends on ASML’s technology to be produced at scale.
The broader Dutch semiconductor ecosystem — including NXP Semiconductors in Eindhoven, the High Tech Campus, and research institutions like imec’s Dutch operations — stands to benefit from increased investment flowing into the AI chip sector. “Every new serious entrant in the AI chip market increases demand for advanced manufacturing equipment and expertise,” said a semiconductor analyst based in Amsterdam. “That’s good news for the Dutch tech sector.”
A New Competitive Landscape
Etched’s rise signals a shift in the AI hardware market. For years, Nvidia has enjoyed a near-monopoly on the chips that power AI workloads, commanding gross margins above 70% and a market capitalization that briefly touched $4 trillion. Etched is among a growing group of startups — including Cerebras, Groq, and d-Matrix — betting that specialized architectures can beat Nvidia at specific tasks.
The company’s $5 billion valuation and $1 billion revenue milestone suggest that enterprise customers are willing to bet on alternatives. Etched has reportedly secured contracts with several major cloud providers and enterprise AI labs looking to reduce inference costs for large-scale deployments.
What It Means for European Tech
For Europe — and the Netherlands in particular — the diversification of the AI chip supply chain is strategically significant. The European Chips Act, which came into effect in 2023, aims to double Europe’s share of global semiconductor production to 20% by 2030. Dutch companies like ASML and NXP are central to that ambition, and a more competitive AI chip market creates more opportunities for European suppliers and researchers to collaborate across the Atlantic.
As Etched scales toward its next phase of growth, the company’s demand for advanced manufacturing capacity will only increase — and much of that capacity flows through the cleanrooms of Veldhoven.
