U.S. Orders Saudi Fund to Divest From AI Chip Startup

In a recent move by the Biden administration, a Saudi Aramco venture capital arm, known as Prosperity7, has been instructed by U.S. authorities to sell its stake in a cutting-edge AI chip company. This development comes as American regulators continue to scrutinize foreign investments in sectors they consider sensitive to national security.

Implications for AI Chip Innovation

Rain Neuromorphics, the startup in question, is at the forefront of AI technology with its innovative design of chips that imitate brain functions. These chips are poised to revolutionize the AI industry by enhancing the capabilities of AI algorithms. In 2022, Rain Neuromorphics successfully raised $25 million with the backing of Sam Altman, co-founder of OpenAI, and other investors including Prosperity7.

Forced Divestment Following U.S. Review

After a diligent review by the Committee on Foreign Investment in the United States (CFIUS), sources report that the U.S. has demanded the Saudi entity exit its investment in the AI firm. CFIUS, chaired by the Department of Treasury, is tasked with reviewing deals that may raise national security concerns and has the authority to mandate the reversal of such transactions.

The precise timing of this divestment has not been publicly disclosed, but according to Bloomberg News, this directive was issued over the past year. The move follows wider U.S. efforts to restrict the flow of advanced AI technology to certain countries in the Middle East, with American chipmakers Nvidia and Advanced Micro Devices being subject to new export limitations as of August last year.

As of now, there has been no immediate response from Sam Altman or the U.S. Treasury, which manages CFIUS, to requests for comments on this matter.

US, AI, investment