OpenAI’s Sam Altman in talks with Middle East backers over chip venture

Sam Altman is in discussions with Middle Eastern investors and chip fabricators including TSMC about launching a new chip venture, as the OpenAI chief executive seeks to satisfy his company’s growing need for semiconductors while reducing its reliance on Nvidia.

Mr Altman has spoken to some of the wealthiest investors in the region about funding the ambitious new project to develop chips required to train and build AI models, and the plants required to fabricate them, according to people with direct knowledge of the talks.

The 38-year-old entrepreneur is in talks with investors in the United Arab Emirates, including Sheikh Tahnoon bin Zayed al-Nahyan, one of Abu Dhabi’s wealthiest and most influential figures, about funding the venture, said the people.

He is also talking to Taiwanese chipmaker Taiwan Semiconductor Manufacturing Co about a partnership to fabricate the chips, they said.

OpenAI and TSMC declined to comment. It was not immediately possible to reach Sheikh Tahnoon for comment. Bloomberg first reported that Mr Altman was in talks over a chip venture with Middle Eastern investors.

Sheikh Tahnoon is one of the UAE’s most powerful men, a brother of the Gulf state’s president Sheikh Mohammed bin Zayed al-Nahyan, for whom he is national security adviser. He also oversees a rapidly expanding business empire and chairs some of Abu Dhabi’s most powerful state investment funds.

These include the $800 billion (€733 billion) Abu Dhabi Investment Authority and ADQ, another state investment entity. He also chairs International Holding Company, a sprawling conglomerate that has rapidly become the UAE’s largest listed firm, and G42, an ambitious AI company that has partnerships with Microsoft and OpenAI.

It is not clear how much Mr Altman has sought to raise for his new venture, but designing and developing chips is a very expensive endeavour and attempting to compete with Nvidia, which has a market capitalisation of almost $1.5 trillion, is likely to cost billions of dollars.

Chips have become the hottest commodity for start-ups in Silicon Valley and established technology businesses elsewhere in the last year, giving a handful of leading chip fabricators the role of kingmakers in the race for AI supremacy.

Increasingly powerful semiconductors, most prominently Nvidia’s graphics processing units, or GPUs, have formed the bedrock for the revolution in artificial intelligence.

OpenAI and other leading companies rely on thousands of chips to train and run their large language models and competition for GPUs is fierce. The supply of semiconductors is tightly controlled by a handful of large companies.

OpenAI is working on a new iteration of its AI model, expected to arrive this year and to be a major upgrade on its latest product, GPT-4. Upgrades to each model make the company more reliant on its partners’ chips.

It is not clear whether Mr Altman’s chip venture will be managed as a subsidiary of OpenAI, or as a separate entity. According to two people with knowledge of the plans, OpenAI will be the new company’s primary customer.

Last November, Mr Altman was dramatically ousted as chief executive of OpenAI, which he co-founded in 2015, by the company’s board for not being “consistently candid” with them. Following an employee and investor revolt against the decision, Mr Altman returned within a week. – Copyright The Financial Times Limited 2024


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