Sources: Nvidia is in early talks with South Korean AI chip maker Rebellions for a potential deal, including a partnership, an investment, or an acquisition (Yoolim Lee/Bloomberg)

Three Harvard graduates founded a San Jose startup called Etched, aiming to build advanced AI semiconductors that could potentially challenge Nvidia's dominance in the market. Despite being a young company with a short history, Etched has garnered significant attention and investment. In a recent press release, Etched announced it had secured a $700 million funding round, leading to a $21 billion valuation, nearly double its estimated worth from one month prior.

Major investors, including Jane Street, Sequoia Capital, Andreessen Horowitz, and Blackstone, have expressed interest in backing the company. Etched's technology focuses on enhancing AI inference efficiency through Low Voltage Inference (LVI) and Cluster Scale Memory (CSM). These innovations allow the company's chips to perform AI tasks more quickly and with less power consumption compared to Nvidia's GPUs.

Etched has already secured contracts for its products totaling over $1 billion and claims to have developed "frontier inference clusters" that outperform Nvidia's Blackwell processor by a significant margin in certain tasks. While analysts and investors are optimistic about Etched's potential, some caution that the company is still in its early stages and faces challenges.

However, the rapid hiring of top talent from Nvidia and other tech giants, along with impressive product performance, has generated considerable excitement in the industry.