U.S. Intervenes in Saudi-Backed AI Startup Deal, Citing National Security Concerns

Mukund Kapoor
By Mukund Kapoor - Author 2 Min Read
2 Min Read

U.S. government mandates Saudi venture capital firm exits its investment in a promising AI chip startup.

In Short
  • The Biden administration forced a Saudi-backed firm to sell its stake in a Silicon Valley AI chip startup, Rain Neuromorphics.
  • The move followed a review by CFIUS, emphasizing U.S. national security concerns in foreign AI technology investments.
  • This action is part of the U.S.'s broader strategy to control advanced technology exports, especially AI, to certain regions.

December 1, 2023: The Biden administration has recently enforced a significant move in the AI sector, compelling a Saudi Aramco-backed venture capital firm to divest its stake in a Silicon Valley AI chip startup.

This action was taken following a review by the Committee on Foreign Investment in the United States (CFIUS), which assesses foreign investments for national security implications.

The startup in question, Rain Neuromorphics, backed by OpenAI co-founder Sam Altman, specializes in designing innovative chips that mimic brain functionality.

These chips are intended to power companies that utilize artificial intelligence algorithms. Rain Neuromorphics had previously raised $25 million in 2022, with Aramco’s Prosperity7 participating as a lead investor in this funding round.

CFIUS’s intervention led to Prosperity7 selling its shares in Rain AI. This move aligns with the U.S.’s increased scrutiny over foreign investments in critical technology sectors, especially when it involves influential players from the Middle East.

The U.S. government’s stance reflects growing concerns about the potential national security risks associated with foreign entities gaining access to advanced AI technology.

Sam Altman, who is at the forefront of AI innovation, did not immediately comment on this development. Meanwhile, the U.S. Treasury, which oversees CFIUS, maintained its standard practice of not publicly discussing specific transactions under review.

This decision by the U.S. administration is part of a broader strategy to regulate the flow of advanced technologies, especially AI, to certain regions.

Earlier, in August, the U.S. expanded restrictions on exports of sophisticated AI chips from NVIDIA and Advanced Micro Devices to some Middle Eastern countries, indicating a concerted effort to maintain a tight grip on AI technology proliferation.

This move by CFIUS and the U.S. government underscores the complex interplay between technological advancement, international investment, and national security.

It also highlights the strategic importance of AI technology in the global economic and security landscape.


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By Mukund Kapoor Author
Mukund Kapoor, the enthusiastic author and creator of GreatAIPrompts, is driven by his passion for all things AI. With a special knack for simplifying complex AI concepts, he's committed to helping readers of all levels - be it beginners or experts - navigate the intriguing world of artificial intelligence. Through GreatAIPrompts, Mukund ensures that readers always have access to the most recent and relevant AI news, tools, and insights. His dedication to quality, accuracy, and clarity is what sets his blog apart, making it a reliable go-to source for anyone interested in unlocking the potential of AI. For more information visit Author Bio.
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