Source Foundry, a chipmaking startup reportedly valued at $5 billion, has secured fresh investment from hedge fund Situational Awareness as it seeks to reinvent semiconductor manufacturing.
Situational Awareness Bets Big on Chip Startup
Situational Awareness has invested $500 million in Source Foundry, including a new $400 million infusion this week, the Wall Street Journal reported on Friday, citing people familiar with the matter.
The investment comes as the hedge fund faces pressure from losses tied to its bets on artificial intelligence companies and technologies.
Situational Awareness did not immediately respond to Benzinga‘s request for comment.
Source Foundry was founded last year by Stanford researchers Abdulmalik Obaid and Joe Burg. The startup has also previously received backing from Sequoia Capital.
In a statement earlier, Sequoia partner Stephanie Zhan said Source Foundry is targeting a major bottleneck in semiconductor manufacturing by developing tools for lithography.
She noted that constraints become increasingly significant further up the AI supply chain, from models and chips to the machines used to manufacture those chips.
Taking Aim at ASML’s Lithography Grip
The startup aims to fix a core bottleneck in AI computing by challenging Dutch giant ASML Holding (NASDAQ:ASML), whose extreme ultraviolet lithography machines are essential for making cutting-edge AI chips.
ASML’s machines are the size of a school bus, take a long time to build and install, and can cost more than $400 million each. ASML posted 32.67 billion euros ($37.76 million) in sales in 2025.
Contrarian Bet Amid Fund Turmoil
Run by 24-year-old Leopold Aschenbrenner, Situational Awareness sold most of its public stock holdings to Ken Griffin‘s Citadel in July after steep losses.
Investor Ross Gerber said the forced unwind drove much of last month’s broader tech selloff, while Galaxy Digital‘s (NASDAQ:GLXY) Mike Novogratz called it the most catastrophic hedge fund blowup of his career.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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