AI has become a crucial pillar for future technological development, and AI chips are the new energy driving industry growth. Industry leaders are even planning to rebuild the AI chip industry from scratch to challenge NVIDIA. While the discussion about whether Altman’s $7 trillion chip empire should exist is ongoing, he has already approached the US government seeking policy support.
Without the green light from the US government, it would be difficult for Altman to seek funding from investors in the Middle East or collaborate with chip manufacturing giants like TSMC and Samsung. However, Altman is already familiar with Washington officials, having advocated for AI initiatives in Congress multiple times. Government officials who have met with him have praised him.
According to reports, Altman has already met with US Commerce Secretary Gina Raimondo to discuss relevant issues and hopes to meet other government officials as well. The Department of Commerce has already had internal discussions regarding OpenAI’s plan to seek funding from Middle Eastern capital.
OpenAI has stated in a declaration that they have had productive discussions regarding the global infrastructure and supply chain for increasing chips, energy, and data centers, which are crucial for AI and other related industries. Altman is also considering establishing a new company separate from OpenAI to enter the AI chip industry. If the plan is implemented, it may raise antitrust issues, which is why approval from the US government is necessary before proceeding.
Furthermore, if Altman seeks investment from entities like the UAE Sovereign Wealth Fund, the transaction is likely to be reviewed by the Committee on Foreign Investment in the United States (CFIUS). If Altman’s plan to “rebuild a chip industry” is put on the agenda, it will inevitably conflict with the content of the previously passed “chip act” in the US.
Challenging NVIDIA, SoftBank founder Masayoshi Son is also eyeing the AI chip market. Son is seeking up to $100 billion in funding to create a chip company that can compete with NVIDIA and focus on producing semiconductors crucial for AI. This project, called “Izanagi,” signifies Son’s decision to invest in critical tracks again after significantly reducing investments in startups following SoftBank’s investment in Arm Holdings. It is reported that SoftBank will invest $30 billion, and an additional $70 billion may come from investors in the Middle East. If Son’s plan is realized, it will be the largest investment in the AI field since the emergence of ChatGPT, even surpassing Microsoft’s investment of over $10 billion in OpenAI.
The project is named “Izanagi” not only because it is a deity of creation in Japanese mythology but also because it represents the initials of “Artificial General Intelligence (AGI).” Son is not a follower when it comes to pursuing AGI. He has long predicted that a world filled with machines smarter than humans will be safer, healthier, and happier.
The funding sources and specific investment methods for the project are still under discussion and have not been finalized. It is known that Son is exploring various investment plans and strategies to expand Arm’s influence in the AI market and research different types of next-generation chips. Therefore, there is no clear indication yet whether this $100 billion investment will continue to bet on Arm or establish a new company.
There were previous reports that Son and Sam Altman from OpenAI discussed cooperation and fundraising for semiconductor manufacturing, but the outcome seemed unfavorable. Therefore, the “Izanagi” project is completely independent of Altman’s plan.
However, it is not easy to start afresh and leave NVIDIA behind. Graphcore, a leading player in the UK’s chip field, is currently discussing possible transactions with large tech companies to raise new funds to cover significant losses since it failed to profit from the rapid development of AI as expected. At the same time, the company’s major investors have significantly increased their valuation of the company’s shares, indicating that the transaction amount may exceed $500 million.
Rumored potential buyers include UK-based Arm, Japanese tech giant SoftBank, and OpenAI, the startup behind ChatGPT. Detailed selling plans have not yet been disclosed, and the sale of the company seems to be happening simultaneously with negotiations for a new round of independent financing.
The selling plan is primarily due to changes in the valuation of Graphcore shares held by its shareholders. Several weeks ago, the valuation of Graphcore shares more than doubled, leading analysts to speculate that it may be related to the sale of the company. According to an investor’s estimation, this puts Graphcore’s valuation at $528 million.
Graphcore initially attempted to challenge industry giants like NVIDIA with its AI-focused chips. However, the company not only experienced a 46% decrease in revenue last year but also continued to incur expanding losses, facing difficulties in raising funds. Graphcore reported an 11% increase in losses in 2022, reaching $204.6 million, while revenue dropped from $5 million to $2.7 million. Additionally, the company only had $157 million in cash at the end of the year.
Previously, Graphcore raised over $700 million in funding from investors, including Microsoft and Sequoia Capital, with a valuation of $2.8 billion in its last fundraising round at the end of 2020. However, according to accounts filed with the UK Companies Registrar, the company had expected to complete a new financing round in the third quarter of last year but has not publicly disclosed any financing information to date.
Currently, Graphcore has carried out layoffs and closed international offices to reduce costs. In comparison, NVIDIA, the big brother, has seen a surge in demand during the AI revolution, with a market value surpassing Amazon and Google, reaching $1.8 trillion, making it the world’s third-largest tech company.
