“OpenAI Agreed to Buy $51 Million of AI Chips From a Startup Backed by CEO Sam Altman”, 2023-12-03 (; backlinks):
[cf. Tigris, Cerebras] …During Sam Altman’s tenure as CEO, OpenAI signed a letter of intent to spend $51 million on AI chips from a startup called Rain AI into which he has also invested personally.
Rain is based less than a mile from OpenAI’s headquarters in San Francisco and is working on a chip it calls a “neuromorphic processing unit”, or NPU, designed to replicate features of the human brain. OpenAI in 2019 signed a nonbinding agreement to spend $51 million on the chips when they became available, according to a copy of the deal and Rain disclosures to investors this year seen by WIRED. Rain told investors Altman had personally invested more than $1 million into the company [so ~10% of the equity?]. The letter of intent has not been previously reported.
The investor documents said that Rain could get its first hardware to customers as early as October next year. OpenAI and Rain declined to comment.
…But the distraction and intermingling of his myriad pursuits played some role in his recent firing by OpenAI’s board for uncandid communications, according to people involved in the situation but not authorized to discuss it…[The Prosperity7 fundraise] valued the company at $90 million excluding the new cash raised, according to the disclosures to investors. The documents cited Altman’s personal investment and Rain’s letter of intent with OpenAI as reasons to back the company.
…Rain at one point has claimed to investors that it has held advanced talks to sell systems to Google, Oracle, Meta, Microsoft, and Amazon. Microsoft declined to comment, and the other companies did not respond to requests for comment. [So they have sold nothing to anyone besides OA, or else they would be touting that instead.]
…Rain touted its progress to potential investors earlier this year, projecting that as soon as this month it could “tape out” a test chip, a standard milestone in chip development referring to a design ready for fabrication. But the startup also has recently reshuffled its leadership and investors after reportedly an interagency US government body that polices investments for national security risks mandated Saudi Arabia-affiliated fund Prosperity7 Ventures to sell its stake in the company. The fund led a $25 million fundraise announced by Rain in early 2022.
The forced removal of the fund, first reported by Bloomberg Thursday and described in the documents seen by WIRED, could add to Rain’s challenges of bringing a novel chip technology to market, potentially delaying the day OpenAI can make good on its $51 million advance order. Silicon Valley-based Grep VC acquired the shares; it and the Saudi fund did not respond to requests for comment.
US concern about Prosperity7’s deal with Rain also raises questions about another effort by Altman to increase the world’s supply of AI chips. He’s talked to investors in the Middle East in recent months about raising money to start a new chip company to help OpenAI and others diversify beyond their current reliance on Nvidia GPUs and specialized chips from Google, Amazon, and a few smaller suppliers, according to two people seeking anonymity to discuss private talks…The government doesn’t care about the money”, she says. “It cares about access and control and the power of the foreign party.”
Rain received a small seed investment from the venture unit of Chinese search engine Baidu apparently without problems but the larger Saudi investment attracted substantial concerns. Prosperity7, a unit of Aramco Ventures, which is part of state-owned Saudi Aramco, possibly could have let the oil giant and other large companies in the Middle East to become customers but also put Rain into close contact with the Saudi government…3 attorneys who regularly work on sensitive deals say they could not recall any previous Saudi Arabian deals fully blocked by CFIUS. “Divestment itself has been quite rare over the past 20 years and has largely been a remedy reserved for Chinese investors”, says Luciano Racco, co-chair of the international trade and national security practice at law firm Foley Hoag.
…Rain now has about 40 employees, including experts in both development of AI algorithms and traditional chip design, according the disclosures.
The startup appears to have quietly changed its CEO this year and now lists founding CEO Gordon Wilson as executive advisor on its website, with former white-shoe law firm attorney William Passo gaining a promotion to CEO from COO.
Wilson confirmed his exit in a LinkedIn post Thursday, but did not provide a reason. “Rain is poised to build a product that will define new AI chip markets and massively disrupt existing ones”, he wrote. “Moving forward I will continue to help Rain in every way I can.” Over 400 LinkedIn users including some whose profiles say they are Rain employees commented on Wilson’s post or reacted to it with heart or thumbs up emojis—Passo wasn’t among them. Wilson declined to comment for this story.
The company will search for an industry veteran to permanently replace Wilson, according to an October note to investors seen by WIRED.
Rain’s initial chips are based on the RISC-V open-source architecture.