Nvidia competitor Etched announced this week that TSMC had manufactured its first chip earlier this year. While the four-year-old, $5 billion startup is preparing to ship systems powered by this chip to customers later this summer, scaling up production may prove challenging. Like other chip designers, Etched must compete for limited capacity at TSMC’s factories in Taiwan.
Copper Sky Capital, one of Etched’s early investors, hopes the chipmaker will find a solution to its production constraints by eventually producing chips at TSMC’s Arizona facility. When the four-year-old VC firm invested in Etched’s $120 million Series A two years ago, founder Jack Selby secured an allocation in part by promising to help the startup eventually bring chip manufacturing back to Arizona.
Selby, a former PayPal executive and longtime managing director at Peter Thiel’s family office, Thiel Capital, founded Phoenix-based Copper Sky in 2021 (formerly known as AZ-VC). The company’s first $115 million fund focused primarily on startups based in Arizona and the Southwest. Selby’s thesis was that most coastal startups, particularly those based in California, Massachusetts and New York, are grossly overvalued compared to companies emerging in his region. But Selby saw an opportunity to bridge the gap in the other direction, helping startup hardware companies based in California move their production to Arizona.
Selby credits Copper Sky’s investment in Etched — an otherwise hard-to-reach startup — to its significant role in Arizona’s economy. As a member of its board of directors Arizona Commerce AuthoritySelby is deeply involved in recruiting out-of-state businesses to set up manufacturing operations in the area.
“When Copper Sky invested with Etched, the company clearly understood our connectivity to the Arizona semiconductor industry, and specifically local TSMC GIGAFAB,” Selby told TechCrunch.
While Copper Sky has recently expanded its focus beyond the Southwest to include non-traditional venture hubs nationwide, Selby said the company is also interested in supporting hardware companies, including in the defense sector, that can establish manufacturing operations in Arizona.
The company is expected to soon have more capital to invest in these higher priced cruise lines and those across the United States. Copper Sky is currently raising a second round of $300 million, according to a regulatory filing.
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