Etched Fields, an AI chip startup that recently raised $700 million at a $21 billion valuation, is now reportedly receiving investment offers valuing the company at more than $40 billion. Sources familiar with the company say bids range from $40 billion from prominent investors to $50 billion from lesser-known backers. These discussions are in early stages, and terms may evolve if a deal proceeds.

The startup focuses on developing complete AI hardware systems powered by proprietary chips, a costly but strategic segment of the AI industry. According to insiders, raising another round comparable in size to its last could provide Etched with up to 3.5 years of operational runway.

Etched has attracted attention for its potential to compete with Nvidia. The quant trading firm Jane Street led the previous $700 million round and is also a customer, having received an early system. Etched announced in July that it had secured $1 billion in customer orders, including Jane Street’s, following the manufacturing of its test chip at TSMC earlier this year.

Co-founder and COO Robert Wachen has highlighted the company’s innovation in designing two new chip components aimed at accelerating inference, the process AI models use to generate outputs after receiving inputs. Etched claims its chips can process more tokens faster and at a lower cost than Nvidia’s offerings, a critical advantage for clients like Jane Street where speed translates into significant profit.

The startup has also drawn talent from Nvidia, with approximately 15% of its 400 employees having previously worked at the chip giant. Etched operates a 10-megawatt data center in Silicon Valley and maintains a production coordination facility in Taiwan near TSMC’s manufacturing sites.

Founded by Harvard dropouts Gavin Uberti, Chris Zhu, and Robert Wachen, Etched has quickly scaled its valuation through rapid funding rounds. In July, it raised $300 million at a $10.3 billion valuation led by Sequoia Capital, followed by the $700 million round in September. These back-to-back financings reflect a growing trend among high-profile startups to split large fundraises into multiple tranches with escalating valuations.