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OpenAI To Get Funding From Temasek — Enough To Outmuscle Chip Giants?

Last Updated March 6, 2024 1:52 PM
Giuseppe Ciccomascolo
Last Updated March 6, 2024 1:52 PM

Key Takeaways

  • Temasek, a prominent global investor, is considering investing in OpenAI, the creator of ChatGPT.
  • Sam Altman is seeking funding to establish a semiconductor business.
  • Will OpenAI undermine Nvidia and AMD’s leadership in the chipmaking sector?

In a potentially groundbreaking move, Singapore’s State-owned investment firm Temasek is in talks to invest in OpenAI, the creator of the popular artificial intelligence (AI) chatbot ChatGPT. This would the

The discussions come as OpenAI’s CEO, Sam Altman, pursues ambitious plans to build an independent semiconductor business. This would potentially disrupt the AI chip market but is it enough to compete with Nvidia and AMD?

Temasek To Invest In OpenAI

Singapore’s Temasek Holdings is currently engaged in discussions regarding a potential investment in OpenAI. It marks a significant milestone as the first instance of State-backed funding for the ChatGPT creator, the Financial Times reported .

According to sources familiar with the matter, senior executives at Temasek have held multiple meetings with OpenAI’s CEO, Sam Altman, over recent months.

Initially expressing interest in investing in Altman’s venture capital fund, Hydrazine Capital, discussions have since shifted towards OpenAI itself. While these talks are ongoing and at a preliminary stage, no definitive agreement has been reached regarding the size or terms of the investment. Both OpenAI and Temasek have chosen not to comment on the specifics of these discussions.

Temasek’s $287 billion portfolio includes some of the world’s top tech start-ups including payments group Stripe.

What Are Altman’s Plans?

The negotiations coincide with Altman’s efforts to secure funding for ambitious plans to establish a semiconductor business. These plans aim at reducing OpenAI’s reliance on cutting-edge chips supplied by Nvidia.

Altman posted  on X last month: “Building massive-scale AI infrastructure, and a resilient supply chain, is crucial to economic competitiveness. OpenAI will try to help.”

Despite experiencing significant revenue growth since the launch of ChatGPT in November 2022, Altman has acknowledged that OpenAI continues to operate at a loss. To cause this are the substantial expenses involved in developing and training its models.

Estimates  of the costs associated with expanding AI infrastructure vary widely. They can range from hundreds of billions of dollars to as high as $7 trillion over the coming years. These figures pose challenges for traditional tech venture capitalists.

Altman has also explored fundraising opportunities with high-net-worth investors from the Middle East and Asia. These include Sheikh Tahnoon bin Zayed al-Nahyan, a prominent figure in Abu Dhabi, known for his substantial wealth and influence. Altman also contacted SoftBank founder Masayoshi Son.

Can OpenAI Compete With Chip Giants?

Nvidia and AMD currently dominate the AI chip market, with Nvidia enjoying a particularly strong foothold thanks to its early investments in GPU technology, which is highly adept at handling AI computations. However, OpenAI’s potential entry into this market with a significant investment has the potential to disrupt the status quo.

The introduction of innovative chip designs by OpenAI could surpass  the capabilities of existing offerings from Nvidia and AMD, potentially reshaping market dynamics.

OpenAI’s contemplation of acquiring capabilities for in-house chip manufacturing indicates a strategic shift toward vertical integration. This move could significantly impact the supply chain dynamics of Nvidia and AMD. Both of them rely on a network of third-party manufacturers. Should OpenAI’s venture lead to advancements in chip manufacturing processes, it could prompt Nvidia and AMD to reconsider their supply chain strategies to maintain competitiveness.

Analysts speculate  that OpenAI‘s strategic move may prompt Nvidia and AMD to explore strategic partnerships or acquisitions to fortify their positions. These companies might seek collaborations with other tech giants or startups specializing in AI and machine learning to enrich their product portfolios and solidify their standing in the market.

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