OpenAI Agreed to Buy $51 Million of AI Chips From a Startup Backed by CEO Sam Altman

Rain at one level has claimed to traders that it has held superior talks to promote programs to Google, Oracle, Meta, Microsoft, and Amazon. Microsoft declined to remark, and the opposite firms didn’t reply to requests for remark.

Security Fears

The funding spherical led by Prosperity7 introduced final yr introduced Rain’s complete funding to $33 million as of April 2022. That was sufficient to function via early 2025 and valued the corporate at $90 million excluding the brand new money raised, based on the disclosures to traders. The paperwork cited Altman’s private funding and Rain’s letter of intent with OpenAI as causes to again the corporate.

In a Rain press launch for the fundraise final yr, Altman applauded the startup for taping out a prototype in 2021 and stated it “could vastly reduce the costs of creating powerful AI models and will hopefully one day help to enable true artificial general intelligence.”

Prosperity7’s funding in Rain drew the curiosity of the interagency Committee on Foreign Investment within the United States, which has the facility to scuttle offers deemed to threaten nationwide safety.

CFIUS, because the committee is thought, has lengthy been involved about China having access to superior US semiconductors, and has grown more and more fearful about China utilizing intermediaries within the Middle East to quietly study extra about essential know-how, says Nevena Simidjiyska, a accomplice on the regulation agency Fox Rothschild who helps shoppers with CFIUS opinions. “The government doesn’t care about the money,” she says. “It cares about access and control and the power of the foreign party.”

Rain obtained a small seed funding from the enterprise unit of Chinese search engine Baidu apparently with out issues however the bigger Saudi funding attracted vital considerations. Prosperity7, a unit of Aramco Ventures, which is a part of state-owned Saudi Aramco, presumably may have let the oil large and different massive firms within the Middle East to turn into clients but in addition put Rain into shut contact with the Saudi authorities.

Megan Apper, a spokesperson for CFIUS, says the panel is “committed to taking all necessary actions within its authority to safeguard U.S. national security” however that “consistent with law and practice, CFIUS does not publicly comment on transactions that it may or may not be reviewing.”

Data disclosed by CFIUS reveals it opinions a whole bunch of offers yearly and within the few circumstances the place it has considerations sometimes works out safeguards, resembling barring a international investor from taking a board seat. It couldn’t be discovered why the committee required full divestment from Rain.

Three attorneys who repeatedly work on delicate offers say they may not recall any earlier Saudi Arabian offers totally blocked by CFIUS. “Divestment itself has been quite rare over the past 20 years and has largely been a remedy reserved for Chinese investors,” says Luciano Racco, cochair of the worldwide commerce and nationwide safety apply at regulation agency Foley Hoag.

OpenAI possible wants to search out companions with deep-pocketed backers whether it is to realize some management over its {hardware} wants. Competitors Amazon and Google have spent years creating their personal customized chips for AI tasks and might fund them with income from their profitable core companies. Altman has refused to rule out OpenAI making its personal chips, however that too would require vital funding.