According to people familiar with the company, just a few months after Etched raised $700 million in financing at a valuation of $21 billion, this AI chip startup has now received investment proposals that amount to double or even more of its current value.

According to an informed source, the bidding range currently under consideration by Etched ranges from $40 billion proposed by top investors to $50 billion offered by less well-known supporters. The source noted that these financing negotiations are still in their early stages, so the terms may change if a deal is ultimately reached. Etched has declined to comment on the matter.

Although it seems like there's a tight schedule to conduct another round of substantial financing so soon, Etched is targeting a particularly expensive niche within the AI industry: creating complete AI hardware systems driven by their own proprietary chips. People familiar with these proposals say that if the company manages to raise funds comparable to the previous round, this could provide a funding buffer for up to 3.5 years for Etched.

There is also a reason why venture capitalists are keen to hold a stake in Etched. This four-year-old startup has demonstrated the potential to challenge NVIDIA. Not only did the quantitative trading firm Jane Street lead the last round of financing of $700 million, but it is also a customer and received an early-stage system. In July, Etched stated that after manufacturing test chips at TSMC's factory this summer, the company had received a $1 billion customer order, which included orders from Jane Street.

Co-founder and Chief Operating Officer Robert Wachen previously told TechCrunch that investors are so excited because Etched has designed two new components from scratch to speed up the inference process – that is, the computational steps that occur after users submit prompts.

The company claims that its chips process token faster and at a lower cost than NVIDIA's. This is also why their processors are so attractive for Jane Street; even a very small speed advantage can lead to substantial profits.

According to The Wall Street Journal, Etched has also made a deep impression on investors with its ability to attract NVIDIA engineers; approximately 15% of its around 400 employees previously worked at this chip giant.

Etched is still operating a new 10-megawatt data center in Silicon Valley and has established a facility in Taiwan to coordinate production near TSMC.

Co-founders Gavin Uberti and Chris Zhu are said to have met in a advanced mathematics course at Harvard, while Wachen was once a roommate of Uberti. The three later dropped out of school to start their own business.

In terms of financing rounds that see a rapid increase in valuation, Etched has had similar experiences before. In July, the company announced the completion of a $300 million financing round, with a valuation of $10.3 billion, led by Sequoia Capital; in September, it announced another $700 million financing round, raising its valuation to $21 billion. This practice of dividing a single financing round into two transactions with different valuations is becoming increasingly common among the most highly watched startups.