President Biden-led US govt forces VC backed by Saudi govt to pull out of Sam Altman’s AI chip startup

The Joe Biden-led administration cajoled Prosperity7, a tech venture capital firm backed by the Saudi government to pull out of a startup backed by Sam Altman. The startup, Rain AI was focussed on developing an AI chip that would take on NVIDIA and AMD

The Biden administration has compelled a venture capital firm owned by Saudi Arabia’s Aramco, Prosperity7, to divest its shares in Rain AI, a Silicon Valley AI chip startup supported by Sam Altman, co-founder of OpenAI.

The sale comes after a review conducted by the Committee on Foreign Investment in the United States (CFIUS), the principal US watchdog overseeing deals with potential national security implications.

Prosperity7, a key investor in a funding round that raised $25 million for Rain AI in 2022, underwent the divestment process under CFIUS instructions within the past year, according to anonymous sources familiar with the matter.

The heightened scrutiny reflects the US government’s increasing caution towards Middle Eastern wealth funds, particularly those perceived to have close ties with China. CFIUS is currently evaluating several multibillion-dollar deals this year amid concerns about potential national security risks.

Rain AI, a startup focused on designing AI chips inspired by brain functionality and partially financed by Sam Altman, saw Prosperity7 selling its stake to Silicon Valley investment firm Grep VC, as reported by data firm PitchBook.

Altman, Rain AI, Prosperity7, and Grep VC declined to comment on the matter. CFIUS, in an emailed statement, stated it cannot comment on ongoing transactions but is committed to taking necessary actions within its authority to safeguard US national security.

As geopolitical tensions rise between the US, Europe, and China, Beijing has sought closer ties with the Middle East. In November, China and Saudi Arabia inked a local currency swap agreement worth around $7 billion.

Saudi Aramco, the parent company of Prosperity7, has invested significantly in China’s energy sector, even as Saudi Arabia attempts to attract Chinese tech firms.

Prosperity7’s divestment gains significance against the backdrop of the White House’s efforts to curb China’s technological dominance, particularly in semiconductors critical for future innovations like artificial intelligence.

Meanwhile, Sam Altman is reportedly raising billions for a new AI chip venture, code-named Tigris, aiming to compete with NVIDIA Corp. Altman has travelled to the Middle East to secure funds for the project, though the connection between Rain AI and this initiative remains unclear.

While the AI chip market is presently dominated by NVIDIA, Rain AI, along with Altman and numerous startups globally, aims to design chips that are cost-effective and energy-efficient. The US has restricted the sale of top-performance chips to China, impeding its aspirations to compete in AI.

Rain AI, like other in-memory chip startups, seeks to reconfigure data processing to reduce transfers and decrease power consumption. Altman’s current involvement with Rain AI and his perspective on its technology’s current stage remain uncertain.

(With input from agencies)

The Joe Biden-led administration cajoled Prosperity7, a tech venture capital firm backed by the Saudi government to pull out of a startup backed by Sam Altman. The startup, Rain AI was focussed on developing an AI chip that would take on NVIDIA and AMD

The Biden administration has compelled a venture capital firm owned by Saudi Arabia’s Aramco, Prosperity7, to divest its shares in Rain AI, a Silicon Valley AI chip startup supported by Sam Altman, co-founder of OpenAI.

The sale comes after a review conducted by the Committee on Foreign Investment in the United States (CFIUS), the principal US watchdog overseeing deals with potential national security implications.

Prosperity7, a key investor in a funding round that raised $25 million for Rain AI in 2022, underwent the divestment process under CFIUS instructions within the past year, according to anonymous sources familiar with the matter.

The heightened scrutiny reflects the US government’s increasing caution towards Middle Eastern wealth funds, particularly those perceived to have close ties with China. CFIUS is currently evaluating several multibillion-dollar deals this year amid concerns about potential national security risks.

Rain AI, a startup focused on designing AI chips inspired by brain functionality and partially financed by Sam Altman, saw Prosperity7 selling its stake to Silicon Valley investment firm Grep VC, as reported by data firm PitchBook.

Altman, Rain AI, Prosperity7, and Grep VC declined to comment on the matter. CFIUS, in an emailed statement, stated it cannot comment on ongoing transactions but is committed to taking necessary actions within its authority to safeguard US national security.

As geopolitical tensions rise between the US, Europe, and China, Beijing has sought closer ties with the Middle East. In November, China and Saudi Arabia inked a local currency swap agreement worth around $7 billion.

Saudi Aramco, the parent company of Prosperity7, has invested significantly in China’s energy sector, even as Saudi Arabia attempts to attract Chinese tech firms.

Prosperity7’s divestment gains significance against the backdrop of the White House’s efforts to curb China’s technological dominance, particularly in semiconductors critical for future innovations like artificial intelligence.

Meanwhile, Sam Altman is reportedly raising billions for a new AI chip venture, code-named Tigris, aiming to compete with NVIDIA Corp. Altman has travelled to the Middle East to secure funds for the project, though the connection between Rain AI and this initiative remains unclear.

While the AI chip market is presently dominated by NVIDIA, Rain AI, along with Altman and numerous startups globally, aims to design chips that are cost-effective and energy-efficient. The US has restricted the sale of top-performance chips to China, impeding its aspirations to compete in AI.

Rain AI, like other in-memory chip startups, seeks to reconfigure data processing to reduce transfers and decrease power consumption. Altman’s current involvement with Rain AI and his perspective on its technology’s current stage remain uncertain.

(With input from agencies)