According to a new report published by Bloomberg, the Biden administration compelled Aramco’s investment capital arm, Prosperity7, to divest its stake in the emerging AI chip manufacturing company, Rain Neuromorphics, supported by Sam Altman, co-founder of OpenAI.
This withdrawal could have significant implications on the increasing tech investments of Middle Eastern countries in American technology.
Following a review by the Committee on Foreign Investment in the United States, Prosperity7 sold its shares in the startup. The principal U.S. committee responsible for national security reviews of transactions.
The $1 billion investment capital fund “Prosperity7” is the primary investor in the 2022 funding round that raised $25 million for “Rain Neuromorphics.”
According to the report, the U.S. Committee on Foreign Investment issued guidance sometime last year for the Saudi investment fund to cancel this deal.
The United States is increasing scrutiny over wealth funds’ activities in the Middle East, given their growing involvement in resistance against entities suspected of close ties with China.
As per Bloomberg, the U.S. Committee on Foreign Investment is currently reviewing numerous deals exceeding billions of dollars due to concerns that they may pose a threat to national security.
Rain Neuromorphics, partially funded by Altman, designs AI chips that mimic brain functioning. Prosperity7 sold its stake in Rain Neuromorphics to the investment firm Grep VC, as reported by PitchBook.
The U.S. Treasury Department, overseeing the Committee on Foreign Investment in the United States, stated: “The Committee on Foreign Investment in the United States commits to taking all necessary actions within its mandate to protect American national security.”
It added: “The Committee on Foreign Investment in the United States will not disclose information about reviewed or unreviewed transactions, in line with laws and procedures.”
Amid escalating tensions with the United States and Europe, Beijing sought to enhance relations with the Middle East. A currency exchange agreement was signed between China and Saudi Arabia in November for local currency swaps worth around $7 billion.
Saudi Aramco, owned by Aramco, made billion-dollar investments in the Chinese energy sector, despite the kingdom’s efforts to attract Chinese tech companies.
Here, prominent are the divestments made by Aramco’s investment capital fund, given the White House’s campaign to curb Chinese tech dominance. This campaign specifically targets semiconductor technology that could drive future innovations, including artificial intelligence.
Altman aims to raise billions for a new project to develop AI chips to compete with Nvidia. He traveled to the Middle East to raise donations for a project known by the codename Tigris, as reported by Bloomberg this month.
It remains unclear if Rain Neuromorphics is linked to this effort or if its technology is still in an early development stage.
Nvidia dominates the market concerning AI chips, although Rain Neuromorphics joins various startups from different regions worldwide, from Asia to Europe, aspiring to design affordable and efficient chips for use.
The United States has prohibited the sale of high-performance chips required by China, in order to develop the next generation of artificial intelligence services, which hinders China’s ambitions to compete in this active field.
Rain Neuromorphics and other startups in the field of designing artificial intelligence chips are striving to change the way data is processed to reduce the need for transport operations and minimize energy consumption.
Altman is considered one of the early investors in Rain Neuromorphics, but it is not clear whether he is still involved in the company or how he currently views the technology.
The United States has taken steps that may hinder the development of artificial intelligence technology in the Middle East. In August, the United States expanded restrictions on the export of advanced artificial intelligence chips from the companies Nvidia and AMD to include some countries in the Middle East, according to Reuters.
