Sam Altman sought billions for chip venture before OpenAI ouster

In the weeks leading up to his shocking ouster from OpenAI, Sam Altman was actively working to raise billions from some of the world’s largest investors for a new chip venture, according to people familiar with the matter.

Altman had been traveling to the Middle East to fundraise for the project, which was code-named Tigris, the people said. The OpenAI chief executive officer planned to spin up an AI-focused chip company that could produce semiconductors that compete against those from Nvidia Corp., which currently dominates the market for artificial intelligence tasks. Altman’s chip venture is not yet formed and the talks with investors are in the early stages, said the people, who asked not to be named as the discussions were private.

Altman has also been looking to raise money for an AI-focused hardware device that he’s been developing in tandem with former Apple Inc. design chief Jony Ive. Altman has had talks about these ventures with SoftBank Group Corp., Saudi Arabia’s Public Investment Fund, Mubadala Investment Company, and others, as he sought tens of billions of dollars for these new companies, the people said.

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

Altman’s fundraising efforts came at an important moment for the AI startup. OpenAI has been working to finalize a tender offer, led by Thrive Capital, that would let employees sell their shares at an $86 billion valuation. SoftBank and others had hoped to be part of this deal, one person said, but were put on a waitlist for a similar deal at a later date. In the interim, Altman urged investors to consider his new ventures, two people said.

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

OpenAI said on November 17 that Altman was ousted from his role after an internal review found “he was not consistently candid in his communications with the board.”

The board and Altman had differences of opinion on AI safety, the speed of development of the technology, and the commercialization of the company, 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 staff, Brad Lightcap, OpenAI’s chief operating officer, said: “We can say definitively that the board’s decision was not made in response to malfeasance or anything related to our financial, business, safety, or security/privacy practices. This was a breakdown in communication between Sam and the board.”

OpenAI’s board is currently under pressure from investors to reinstate Altman, with one possibility being that the board resigns. Even if Altman returns, however, he may still need to navigate his side ventures with the assent of OpenAI’s board.

Altman’s pitch was for a startup that would aim to build Tensor Processing Units, or TPUs — semiconductors that are designed to handle high-volume specialized AI workloads. The goal is to provide lower-cost competition to market incumbent Nvidia and, according to people familiar, aid OpenAI by lowering the ongoing costs of running its own services like ChatGPT and Dall-E.

Custom-designed chips like TPUs are seen as one day having the potential to outperform the AI accelerators made by Nvidia — which are coveted by artificial intelligence companies — but the timeline for development is long and complex.

Tapping investors overseas could raise concerns with US regulators. “If the foreign investments are passive — for example, don’t come with board seats — and stay under 10 percent, they are less likely to face scrutiny,” said Philip Ludvigson, a former US Treasury Department official. “That often is the case even in sensitive industries such as artificial intelligence and chipmaking.”

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

A number of prominent venture firms, including some existing investors in OpenAI, are also ready to back any new venture Altman forms, people familiar said. Microsoft Corp., OpenAI’s biggest investor, is also interested in backing Altman’s chips venture, according to people familiar. Microsoft declined to comment.

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