AI-battered hedge fund Situational Awareness made a big bet this week, investing $400 million in Source Foundry, a private company aiming to reinvent the way chips are manufactured. The move comes after the fund suffered significant losses in the AI market downturn.

Source Foundry operates in stealth mode, focusing on novel chip manufacturing techniques that could disrupt the semiconductor industry. The investment signals confidence in the startup's approach despite the broader tech selloff.

The deal underscores the high stakes in chip innovation, as investors seek long-term bets amid market volatility. Situational Awareness's bet may restore some credibility after its AI-driven crash.