Nvidia competitor Etched announced this week that TSMC produced its first chips earlier this year. The four-year-old startup, valued at $5 billion, is preparing to ship systems containing its chips to customers later this summer, but scaling up production could be difficult. Like other chip designers, Etched has to compete for limited production capacity at TSMC's Taiwan factory.
Copper Sky Capital, one of Etched's early investors, hopes the chipmaker will eventually find a solution to manufacturing constraints by producing chips at a TSMC facility in Arizona. When the four-year-old VC firm invested in Etched's $120 million Series A two years ago, founder Jack Selby secured the allocation by pledging to help the startup eventually bring chip manufacturing back to Arizona.
Selby, a former PayPal executive and longtime managing director of Peter Thiel's family office Thiel Capital, founded Phoenix-based Copper Sky (formerly AZ-VC) in 2021. The company's first $115 million fund focused primarily on startups based in Arizona and the Southwest. Mr. Selby's theory was that most coastal startups, especially those based in California, Massachusetts, and New York, were significantly overpriced compared to startups in his region. But Selby saw an opportunity to fill the gap in another direction by helping a California-based hardware startup move production to Arizona.
Selby credits Copper Sky's investment in Etching, an otherwise difficult to access startup, to his influential role in Arizona's economy. As director of the Arizona Commerce Authority, Mr. Selby is heavily involved in recruiting out-of-state companies to set up manufacturing operations in the region.
“When Copper Sky invested in Etched, the company clearly understood its connection to Arizona's semiconductor industry, particularly with local TSMC GIGAFAB,” Selby told TechCrunch.
While Copper Sky has recently expanded its focus beyond the Southwest to include nontraditional venture locations across the United States, Selby said the company is also interested in supporting hardware companies, including those in the defense sector, that could set up manufacturing operations in Arizona.
The company is expected to soon have more capital to invest in these high-value coastal companies and other companies across the country. Copper Sky has now raised a second round of funding of $300 million, according to a regulatory filing.
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