OpenAI to purchase $51 million worth of AI chips from a startup supported by CEO Sam Altman

by Sid

Rain Neuromorphics Faces Security Concerns

In a Rain press release for the fundraise last year, Altman applauded the startup for taping out a prototype in 2021 and said it “could vastly reduce the costs of creating powerful AI models and will hopefully one day help to enable true artificial general intelligence.” The funding round led by Prosperity7 announced last year brought Rain’s total funding to $33 million as of April 2022. That was enough to operate through early 2025 and valued the company at $90 million excluding the new cash raised, according to the disclosures to investors.

Rain at one point has claimed to investors that it has held advanced talks to sell systems to Google, Oracle, Meta, Microsoft, and Amazon. Microsoft declined to comment, and the other companies did not respond to requests for comment. Prosperity7’s investment in Rain drew the interest of the interagency Committee on Foreign Investment in the United States, which has the power to scuttle deals deemed to threaten national security.

CFIUS Intervenes in Rain’s Deal

The Committee on Foreign Investment in the United States (CFIUS) has become increasingly concerned about China using intermediaries in the Middle East to quietly learn more about critical technology. The government is primarily concerned about access and control, rather than financial gains. CFIUS revealed that it reviews hundreds of deals annually and often works out safeguards if it has concerns, such as barring a foreign investor from taking a board seat. However, in Rain’s case, it required full divestment, which has been quite rare over the past 20 years and mostly reserved for Chinese investors.

Concerns Over Saudi Investment

Rain received a small seed investment from the venture unit of Chinese search engine Baidu, but the larger Saudi investment from Prosperity7 raised significant concerns. Concerns were raised due to the Saudi government’s potential close contact with Rain, given that Prosperity7 is a unit of Aramco Ventures, part of state-owned Saudi Aramco. The singular divestment from Rain by CFIUS reflects the government’s focus on safeguarding national security over financial gains.

Impact on OpenAI’s Hardware Needs

OpenAI, considering partnering with Rain, may face challenges due to Rain’s break from its Saudi investors. Altman has refused to rule out OpenAI making its own chips, which would require significant funding. Rain’s divestment from its Saudi investors puts into question the impact on OpenAI’s ability to secure hardware for its needs, given its potential need for powerful backers.

Overall, the divestment from Rain after a significant investment by a Saudi group indicates the strict stance taken by the US government in safeguarding national security interests, especially in the rapidly evolving field of AI technology.

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