"Sam Altman was already trying to lead the development of human-level artificial intelligence. Now he has another great ambition: raising trillions of dollars to reshape the global semiconductor industry.
The OpenAI CEO is in talks with investors including the United Arab Emirates government to raise funds for an ambitious initiative that would boost the world's chip-building capacity and expand its ability to power AI, among other things, and cost several trillion dollars, according to people familiar with the matter. The project could require raising as much $5 trillion to $7 trillion, one of the people said.
The fundraising plans, which face major obstacles, are aimed at solving major constraints to OpenAI's growth, including the scarcity of the pricey AI chips required to train large language models behind AI systems like ChatGPT. Altman has complained that there aren't enough of these chips, known as graphics processing units or GPUs, to power OpenAI's quest for artificial general intelligence, which it defines as systems that are broadly smarter than humans.
Such an eye-watering sum would dwarf the size of the global semiconductor industry. Global sales of chips were $527 billion last year and are expected to rise to $1 trillion annually by 2030. Global sales of semiconductor-manufacturing equipment -- the costly machinery needed to run chip factories -- last year were $100 billion, according to an estimate by industry body SEMI.
The amounts Altman discussed would be outlandishly large by the standards of corporate fundraising -- larger than the national debt of some major global economies and than giant sovereign-wealth funds.
Total U.S. corporate-debt issuance last year was $1.44 trillion, according to the Securities Industry and Financial Markets Association. The combined market capitalization of Microsoft and Apple, the two highest-valued businesses in the U.S., is about $6 trillion.
The fundraising talks are the latest example of ambitious plans from Altman. In addition to kicking off the generative AI revolution in late 2022 with OpenAI's public release of ChatGPT -- an early step in its effort toward building human-level artificial intelligence -- he invested heavily in startups aiming to make cheap energy from nuclear fusion and extend the human lifespan by a decade. Energy factors into Altman's fundraising plans because AI facilities consume enormous amounts of electricity.
Realizing his ambitions for chips and other areas needed to support AI would require persuading a globe-spanning network of funders, industry partners and governments -- including getting the assent of the U.S., for which the semiconductor industry is a strategic priority. Altman met with Commerce Secretary Gina Raimondo and discussed the initiative, according to people familiar with the matter.
"OpenAI has had productive discussions about increasing global infrastructure and supply chains for chips, energy, and data centers -- which are crucial for AI and other industries that rely on them," said an OpenAI spokeswoman. "We will continue to keep the U.S. government informed given the importance to national priorities, and look forward to sharing more details at a later date."
As part of the talks, Altman is pitching a partnership between OpenAI, various investors, chip makers and power providers, who together would put up money to build chip foundries that would then be run by existing chip makers, some of the people said. OpenAI would be a significant customer of the factories. Much of the effort could be funded by debt, one of the people said. The talks are in early stages, the full list of potential investors isn't known, the effort could span years and might not succeed.
Concern about the supply of chips and the electricity needed to run them has grown amid demand for artificial intelligence. Chips from Nvidia, the market leader in AI computation, have been in short supply. AI chips have become part of the geopolitical battle between the U.S. and China for tech dominance, and the U.S. placed restrictions on their export to adversaries.
In recent weeks, Altman met with several key players in his effort, including notably the U.A.E.'s Sheikh Tahnoun bin Zayed al Nahyan, according to some of the people familiar with the matter. He is the country's top security official, brother of U.A.E. President Mohammed bin Zayed al Nahyan, leader of a growing financial portfolio and the chair of many vehicles of Abu Dhabi's sovereign wealth. The U.A.E. would be an important part of the effort, assuming the U.S. lets it play such a role, one of the people said.
Altman met with Masayoshi Son, the CEO of SoftBank, and with representatives from chip-fabrication companies including Taiwan Semiconductor Manufacturing Co. to discuss the venture. In talks with TSMC, Altman said he wants to build dozens of chip plants in the next few years, the people said. His vision would be to raise the money from Middle East investors and have TSMC build and run them.
Bloomberg previously reported Altman's talks with Middle East investors and SoftBank about a chips venture. The Financial Times previously reported Altman's talks with Sheikh Tahnoun and TSMC.
OpenAI so far has developed its AI technology using the computing resources of its partner Microsoft, whose valuation recently surpassed $3 trillion partly because of investor enthusiasm about its AI efforts. Microsoft is aware of OpenAI's efforts to raise funds to expand chip capacity and supports them. Altman shared his plans with CEO Satya Nadella and Chief Technology Officer Kevin Scott, said a person familiar with those discussions.
Among the questions facing Altman's effort is where chip plants would be built. He would prefer the U.S., where the Biden administration is expected to award billions of dollars in subsidies to TSMC and other chip makers in coming weeks to fund new factories. But those companies face challenges expanding in the U.S. TSMC has pointed to delays, shortage of skilled workers and high costs at its $40 billion project in Arizona.
G42, an Abu Dhabi tech company chaired by Sheikh Tahnoun, unveiled a partnership with OpenAI in October to "deliver cutting-edge AI solutions to the U.A.E. and regional markets."
In January, Rep. Mike Gallagher (R., Wis.), the chairman of the House Select Committee on the Chinese Communist Party, sent a letter to Raimondo urging the Commerce Department to investigate G42's ties to China and consider trade restrictions against the company. G42 declined to comment on the chips initiative and didn't respond to a request for comment on Gallagher's letter." [1]
1. OpenAI Seeks Trillions for Chips, AI Push. Keach Hagey; Fitch, Asa. Wall Street Journal, Eastern edition; New York, N.Y.. 09 Feb 2024: A.1.
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