ALBAWABA – The United States (US) forced a Saudi Aramco-backed venture capital firm to sell its shares in a Silicon Valley AI chip startup backed by OpenAI CEO and co-founder Sam Altman, news agencies reported Friday.
This is the latest in a series a measures taken by the US to slow AI-chip development and progress in the Middle East.
Altman-backed Rain Neuromorphics is a startup designing chips that mimic the way the brain works and aims to serve companies using artificial intelligence (AI) algorithms. The startup, Rain AI, raised $25 million in 2022.
Aramco's Prosperity7 sold its shares in the startup after a review by the Committee on Foreign Investment in the United States, unnamed sources told Bloomberg.
The agency, a U.S. watchdog for deals with national security implications, told the Saudi fund to unwind that deal sometime over the past year, the Bloomberg report said.
Altman did not immediately respond to a Reuters’ request for commens, but the US Treasury, which oversees the Committee’s process, did.
US forces Saudi firm out of new startup backed by OpenAI CEO Sam Altman - Shutterstock
"CFIUS is committed to taking all necessary actions within its authority to safeguard US national security. Consistent with law and practice, CFIUS does not publicly comment on transactions that it may or may not be reviewing," the Treasury said, as reported by Reuters.
Prosperity7, a $1 billion venture capital fund, sold its stake in the firm to Silicon Valley investment firm Grep VC, according to data firm PitchBook, as reported by Bloomberg. Whereas Altman, Rain, Prosperity7 and Grep VC did not reply to the New York-based news agency’s requests for comment.
As for why the Saudi company was pushed out, it seems to be a part of a US crackdown to limit access to AI tech in the region, in an attempt also to augment sanctions and restrictions on Russia and China.
In August, the US expanded the restriction of exports of sophisticated Nvidia and Advanced Micro Devices AI chips to include some countries in the Middle East.
Beijing has sought to strengthen ties with the Middle East while tensions escalated with the US and Europe. In November, China and Saudi Arabia signed a local currency swap agreement worth around $7 billion. Saudi Aramco has invested billions of dollars in China’s energy sector even as the kingdom tries to attract Chinese tech companies.
