Sam Altman was trying to raise billions for his chip venture before OpenAI Ouster

In the weeks before his shock ouster from OpenAI, Sam Altman was actively working to raise billions from some of the world's biggest investors for the new chip venture, people familiar with the matter said.

Altman was traveling to the Middle East to raise funds for the project, codenamed Tigris, the people said. The CEO of OpenAI planned to create an AI-focused chip company that could produce semiconductors that would compete with Nvidia, which currently dominates the market for artificial intelligence tasks. Altman's chip venture has not yet been formed and talks with investors are in the early stages, said the people, who asked not to be identified because the discussions were private.

Altman also sought to raise money for the AI-focused hardware he was developing with former Apple design chief Jony Ive. Altman has talked about those ventures with SoftBank Group, Saudi Arabia's Public Investment Fund, Mubadala Investment Co. and others as he seeks tens of billions of dollars for these new companies, the people said.

Many details of the scope and focus of Altman's chip ambitions, as well as the project's codename, have not been previously reported.

Altman's funding effort comes at an important time for the AI ​​startup. OpenAI has been working to complete a tender offer, led by Thrive Capital, that would allow employees to sell their shares at a value of $86 billion. SoftBank and others had hoped to be part of that deal, one of the people said, but were later pulled in pending a similar deal. In the interim, Altman has encouraged investors to consider his new ventures, two of the people said.

A spokesman for Saudi Arabia's PIF did not immediately respond to a request for comment. OpenAI, SoftBank and Mubadala declined to comment.

OpenAI said Friday that Altman was removed from his role after an internal review found that “he was not consistently candid in his communications with the board.” The board and Altman had differences of opinion over AI safety, the speed of technology development and the company's commercialization, according to a person familiar with the matter. Altman's ambitions and side ventures added complexity to an already strained relationship with the board.

In a memo to employees, OpenAI Chief Operating Officer Brad Lightcap said: “We can say with certainty that the board's decision was not made in response to wrongdoing or anything related to our financial, business, security or security/privacy practices. It was a communication breakdown between Sam and the Council.

OpenAI's board is currently under pressure from investors to reinstate Altman, one possibility is for the board to resign. Although Altman will return, he will still need to navigate his side ventures with approval from OpenAI's board.

Altman's pitch was for a startup that aimed to build Tensor Processing Units, or TPUs — semiconductors designed for high-volume specialized AI workloads. The goal is to provide low-cost competition in the incumbent Nvidia market and, according to people familiar with the matter, to help OpenAI by reducing the ongoing costs of running its own services, such as ChatGPT and Dall-E.

Custom-designed chips like TPUs are seen as having the potential to one day outpace Nvidia-built AI accelerators — coveted by AI companies — but development timelines are long and complicated.

Listening to foreign investors may raise concerns with US regulators. “If foreign investments are passive – for example, do not come with board seats – and remain below 10%, they are unlikely to face scrutiny,” said Philip Ludwigson, a former US Treasury Department official. “This often happens even in sensitive industries like artificial intelligence and chip manufacturing.”

Ludvigsson, now a lawyer at King & Spalding, added that the US government “has historically been more focused on China than the Middle East.”

A number of prominent venture firms, including some existing investors in OpenAI, are also poised to back any form of Altman's new venture, people familiar with the matter said. Microsoft, OpenAI's biggest investor, is also interested in backing Altman's chip venture, according to people familiar with the matter. Microsoft declined to comment.

In a statement on X, formerly on Twitter, venture capitalist Vinod Khosla said his firm wanted Altman to “return to OpenAI, but will support him in whatever he does next.”

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