Quiver Quantitative - The Biden administration has recently taken significant steps to safeguard U.S. national security interests in the technology sector. This move includes compelling a Saudi Aramco-backed venture capital firm, Prosperity7, to divest its shares in Rain Neuromorphics, a promising AI chip startup. Rain Neuromorphics, known for developing chips that emulate brain functionality, is notably backed by OpenAI co-founder Sam Altman. The startup, which focuses on serving companies utilizing AI algorithms, successfully raised $25 million in 2022, with Prosperity7 as a lead investor.
The directive for Prosperity7 to sell its stake in Rain AI came from the Committee on Foreign Investment in the United States (CFIUS). This inter-agency committee, operating under the U.S. Treasury, is tasked with reviewing foreign investments in U.S. businesses and real estate that could pose national security risks. According to a Bloomberg News report, the committee advised the Saudi fund to reverse its investment in the past year. Neither Sam Altman nor the U.S. Treasury, overseeing the CFIUS process, has offered public comments on the matter, maintaining a policy of confidentiality on ongoing reviews.
This development underscores a broader U.S. strategy to regulate the global spread and development of sophisticated technologies, particularly in AI. In August, the U.S. expanded restrictions on the export of advanced AI chips, products of companies like Nvidia (NVDA) and Advanced Micro Devices (NASDAQ:AMD), to include certain Middle Eastern countries. This move signals a cautious approach by the U.S. towards the international exchange of technology that has potential national security implications.
The U.S. government's intervention in Rain Neuromorphics' funding illustrates the growing complexity of international technology investments, especially in areas like AI that are pivotal to future innovations. It also reflects the ongoing geopolitical considerations that influence tech trade and development, particularly between the U.S. and regions like the Middle East.
This article was originally published on Quiver Quantitative