Situational Awareness Bets $400 Million on Stealth Chip Startup After Crash
Investment marks the latest known private-company bet by Situational Awareness after quick sale of its stock portfolio
- Hedge fund Situational Awareness invested a fresh $400 million this week in Source Foundry, a private startup aiming to reinvent chip manufacturing.
- Stanford University researchers founded Source Foundry last year, and the startup recently raised funds at a $5 billion valuation.
- The investment shows Situational Awareness founder Leopold Aschenbrenner’s willingness to fund technically complicated and ambitious bets.
AI-battered hedge fund Situational Awareness made a big bet this week in Source Foundry, a private company aiming to reinvent the way chips are manufactured, according to people familiar with the matter.
The company has invested $500 million in the startup, including a fresh $400 million infusion this week, one of the people said. Founded last year by Stanford University researchers Abdulmalik Obaid and Joe Burg, Source Foundry has already raised at least several hundred million dollars to date, including a recent fundraising at a valuation of $5 billion, one of the people said. Sequoia Capital previously backed the startup.
A spokesperson for Situational Awareness didn’t respond to a request for comment.
Situational Awareness, run by 24-year-old Leopold Aschenbrenner, developed a strategy of backing early-stage startups before they have a product or revenue, as well as publicly traded stocks, an uncommon approach that spans nearly every stage of a company’s life cycle. Its investment in Source Foundry shows Aschenbrenner’s willingness to fund technically complicated and ambitious bets that will take many years to develop commercially viable technology.
Aschenbrenner managed a large portfolio of publicly traded stocks, such as memory-chip makers SK Hynix and Sandisk, AI cloud computing provider Nebius Group and fuel-cell maker Bloom Energy, but sold the bulk of its stock portfolio to Ken Griffin’s investment firm Citadel in July after incurring substantial losses.
The hedge fund retained the portfolio of private stakes it had amassed, including a multibillion-dollar stake in Anthropic, as well as investments in the cloud startup Fluidstack and chip startup MatX. Aschenbrenner had told investors he would invest up to 30% of the portfolio in private companies. Situational discussed selling $3.5 billion worth of its Anthropic stake to Sequoia and Greenoaks to cover margin calls from its lenders, but it had a change of heart and backed out of the deal.
Earlier this year, Situational co-led an investment with Lux Capital in Physical Intelligence, which is building an AI model to command robots, valuing it at $11.5 billion, including the new capital, according to people familiar with the matter. Founders Fund, Thrive Capital, Kleiner Perkins, Accel and Iconiq also participated in the financing, which totaled about $1 billion, one of the people said.
Bloomberg earlier reported that Situational had invested $400 million in a company backed by Sequoia.
Source Foundry aims to fix the core bottleneck in AI computing: chip manufacturing. It plans to develop new machines, equipment and software for manufacturing AI chips to challenge Dutch firm ASML Holding. ASML sells extreme ultraviolet lithography machines, which are necessary for making cutting-edge AI chips, and reported sales of 32.67 billion euros in 2025.
“If you trace the AI supply chain upstream, from models to chips to the machines that manufacture them, each layer becomes increasingly critical and constrained,” Stephanie Zhan, a partner at Sequoia, said in a statement. “Source Foundry tackles the tightest bottleneck: tooling for semiconductor manufacturing, starting in lithography.”
ASML’s machines are the size of a school bus, take a very long time to build and install, and can cost more than $400 million each. Source Foundry is betting it can deliver a faster, cheaper alternative that will meet the surging demand for chip-making equipment driven by the AI boom.
Several startups are working on bringing this technology back to the U.S., including Substrate, xLight, and Inversion Semiconductor.
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Obaid completed his Ph.D. at Stanford in 2019 where he focused on bringing silicon computing power to the brain, according to his LinkedIn profile. Burg earned his Ph.D. in materials science and engineering.