US Forces Saudi Aramco Venture Capital Firm to Sell Stake in AI Chip Startup: Latest Blow to Middle East’s AI Development, Saudi Arabia

The United States (US) has pressured a Saudi Aramco-backed venture capital firm to divest its shares in a Silicon Valley AI chip startup supported by OpenAI CEO and co-founder Sam Altman. This move is part of the US’s ongoing effort to impede AI-chip development in the Middle East. Rain Neuromorphics, a startup aiming to create brain-like chips to serve companies using AI algorithms, raised $25 million in 2022 with Altman’s backing. However, Prosperity7, an investment fund under Aramco, was required by the Committee on Foreign Investment in the United States (CFIUS) to sell its stake in the startup. The CFIUS, an agency responsible for overseeing deals with national security implications, instructed the Saudi fund to unwind the deal over the past year. According to undisclosed sources, Prosperity7 eventually sold its shares to Silicon Valley investment firm Grep VC. The US Treasury, overseeing the CFIUS process, affirmed its commitment to safeguarding national security without providing further details. This forced exit appears to be part of the US’s strategy to restrict access to AI technology in the region and intensify sanctions and limitations against Russia and China. In line with this, the US recently expanded export restrictions of sophisticated Nvidia and Advanced Micro Devices AI chips to include certain Middle Eastern countries. As tensions between the US, Europe, and China rise, Beijing has sought to strengthen ties with the Middle East. In November, China and Saudi Arabia signed a local currency swap agreement worth approximately $7 billion, and Saudi Aramco continues to invest billions in China’s energy sector. This latest development highlights the US’s determined efforts to curtail AI-chip development in the Middle East and maintain its technological advantage.