US Government Forces Saudi Fund to Sell Shares in Silicon Valley AI Chip Startup

The Biden administration has reportedly instructed a venture capital firm backed by Saudi Aramco to divest its shares in a Silicon Valley AI chip startup, which has the support of OpenAI co-founder Sam Altman. Rain Neuromorphics, the startup in question, specializes in designing chips that mimic the functioning of the brain and aims to cater to companies using AI algorithms. In a funding round in 2022, the startup managed to raise a substantial $25 million, with Aramco’s Prosperity7 serving as a major investor.

According to sources familiar with the matter, the Committee on Foreign Investment in the United States (CFIUS) conducted a review and subsequently directed the Saudi fund to sell off its shares in Rain AI. This move came as a result of national security implications associated with the investment. While Sam Altman has refrained from providing an immediate comment on the issue, the U.S. Treasury, which oversees the CFIUS process, expressed the agency’s commitment to taking necessary actions within its authority to safeguard U.S. national security.

As an inter-agency committee, CFIUS is responsible for assessing foreign investments in U.S. businesses and real estate that could raise concerns related to national security. This recent action has implications for AI development in the Middle East, with the U.S. extending restrictions on the export of advanced AI chips from companies such as Nvidia and Advanced Micro Devices to certain countries in the region.

This development underscores the increasing scrutiny and regulation of foreign investments, particularly in sensitive technology sectors, as nations seek to protect their technological edge and national security interests. The involvement of CFIUS in influencing the ownership of a prominent AI chip startup demonstrates the strategic considerations that underpin international investments and partnerships in the tech industry.

In conclusion, the intervention of the U.S. government in compelling the Saudi fund to sell its shares in Rain AI, an AI chip startup, highlights the growing focus on safeguarding national security interests in sensitive technology sectors. This case also serves as a reminder of the complex regulatory landscape that governs foreign investments, particularly in the rapidly evolving field of AI and semiconductor technology.