US Forces Saudi Fund to Withdraw from Altman-Backed AI Chip Startup

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The Biden administration has compelled a Saudi Aramco-backed venture capital firm to divest its shares in Rain Neuromorphics, a Silicon Valley AI chip startup supported by OpenAI co-founder Sam Altman, Bloomberg News disclosed on Thursday.

Rain Neuromorphics, spearheaded by Altman, focuses on creating chips that emulate the brain’s functionality to cater to companies utilizing artificial intelligence (AI) algorithms. In 2022, the startup secured $25 million in funding. Aramco’s Prosperity7, a principal investor in the $25 million funding round for Rain AI, has reportedly sold its shares in the startup following a review by the Committee on Foreign Investment in the United States (CFIUS), as per insiders mentioned in the Bloomberg report.

The CFIUS, a U.S. watchdog overseeing deals with national security implications, reportedly instructed the Saudi fund to unwind its investment in Rain Neuromorphics sometime in the past year, according to the same report. The U.S. Treasury, responsible for overseeing the CFIUS process, emphasized that “CFIUS is committed to taking all necessary actions within its authority to safeguard U.S. national security” and refrained from public commentary on transactions under review.

CFIUS, functioning as an inter-agency committee, assesses foreign investments in U.S. businesses and real estate, particularly those with national security implications. This move reflects broader actions taken by the U.S. to regulate and scrutinize foreign involvement in critical technology sectors, with a focus on preserving national security interests.

The U.S. has recently implemented measures that could potentially impede AI development in the Middle East. Notably, in August, the country expanded restrictions on exporting sophisticated Nvidia and Advanced Micro Devices artificial-intelligence chips, encompassing select countries in the Middle East. This policy adjustment aligns with the U.S. government’s strategy to control the flow of sensitive technologies and maintain a strategic advantage in crucial sectors.