OpenAI Bets $51 Million on AI Chips From Altman-Backed Startup

Artificial intelligence research lab OpenAI has signed a letter of intent to spend $51 million on specialized AI chips being developed by Rain Neuromorphics, a Silicon Valley startup that has received personal investment from OpenAI CEO Sam Altman.

AI Chips

The non-binding agreement shows OpenAI’s urgency to secure custom hardware to power pioneering AI models like chatbot ChatGPT amid a shortage of graphics chips normally used for AI.

But it also highlights the web of personal investments Altman has made across the tech industry that now entangle with his leadership of OpenAI.

Rain Neuromorphics, located less than a mile from OpenAI’s San Francisco headquarters, is designing a novel “neuromorphic” processor meant to replicate aspects of the human brain.

The chips aim to be more efficient at running neural networks, the algorithms behind AI systems like ChatGPT.

OpenAI signed the letter of intent in 2019, when the chips were still under development, agreeing to purchase $51 million worth when available. Investor documents from 2022 viewed by WIRED show Altman has personally invested over $1 million in Rain.

Neither OpenAI nor Rain would comment on the deal or Altman’s stake.

But the revelation comes soon after Altman was briefly ousted and then reinstated as OpenAI’s CEO over issues around candid communications and intermingling personal investments.

Rain claims its brain-like chips could yield 100 times more computing power and 10,000 times better energy efficiency for AI training than today’s graphics chips, which are mostly supplied by Nvidia.

Better hardware could allow OpenAI to scale up systems like ChatGPT and reduce its reliance on cloud computing.

Altman has warned that progress in AI may now depend on custom chips and supply chains.

The high costs and limited availability of suitable hardware recently led OpenAI to restrict access to certain ChatGPT features.

Rain aims to provide its first neuromorphic chips to customers by late 2023, but a leadership shakeup and geopolitical tensions pose challenges.

The company has quietly replaced founding CEO Gordon Wilson with former law firm attorney William Passo.

It has also been forced to remove Saudi-backed investor Prosperity7 Ventures on orders from a US national security panel.

The mandated sale of shares to Silicon Valley firm Grep VC follows growing concerns about Saudi access to sensitive technology.

The OpenAI agreement shows it is willing to spend lavishly to gain an edge in the AI chip wars. But it may need to find additional investors if it hopes to reduce reliance on cloud computing and achieve ambitions like developing “artificial general intelligence.”

For a startup like Rain promising novel hardware, delivering working products on schedule is never guaranteed. OpenAI’s $51 million bet may reflect desperation as much as confidence.

About the author

Meet Alauddin Aladin, an AI enthusiast with over 4 years of experience in the world of AI Prompt Engineering. He embarked on his AI journey in 2019, starting with the impressive GPT-2 model. Since December 2022, he has dedicated himself full-time to researching and unraveling the possibilities of AI Prompt, particularly the groundbreaking GPT models.

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