AI chip startup Etched has reportedly raised $500 million in a funding round that was led by investment firm Stripes and includes participation from existing investor, former PayPal CEO Peter Thiel.

According to a report from Bloomberg, the raise has led to the company being valued at $5 billion. Etched has not yet announced the funding round.

Founded in 2022 by Harvard University dropouts Gavin Uberti and Chris Zhu, the Cupertino-based company has developed an AI chip dubbed Sohu to train, deploy, and optimize transformer models – a type of neural network architecture that underpins large language models (LLMs) such as ChatGPT.

The chips will be produced by TSMC using the manufacturer’s 4nm process, and the company has previously said it’s secured high bandwidth memory and server supply from “top vendors,” although those companies have not been named.

According to Etched, while its algorithm-specific ASIC chips won’t be able to run most traditional AI models, such as deep learning recommendation models (DLRMS) or recurrent neural networks (RNNs), Sohu will be more efficient than traditional GPUs as they execute only the specific transformer models they were designed to perform.

The company has also claimed that Sohu is an “order of magnitude faster and cheaper” than Nvidia’s upcoming Blackwell GPUs, with an eight-chip Sohu server serving more than 500,000 Llama 70B tokens per second. In a 2024 interview with TechCrunch, Etched’s CEO, Uberti, said that one Sohu server would replace 160 H100 GPUs.