Documents reveal that OpenAI signed a letter of intent to spend $51 million on brain-inspired chips developed by the startup Rain. OpenAI CEO Sam Altman had previously made a personal investment in Rain.
Altman was reinstated as OpenAI CEO last month shortly after his dismissal, but even if OpenAI had continued developing ChatGPT without him, he would still have had ties to the company’s business plans. During his tenure as CEO, OpenAI signed a non-binding letter of intent to spend $51 million on AI chips from Rain AI, a startup in which he had also invested personally.
Rain, located less than a mile from OpenAI’s San Francisco headquarters, is developing a chip it calls a neuromorphic processing unit (NPU) designed to emulate aspects of the human brain. In 2019 OpenAI signed a non-binding agreement to purchase $51 million worth of Rain chips when they became available, according to a copy of the deal and investor disclosures reviewed by WIRED. Rain told investors that Altman had personally invested more than $1 million in the company. The letter of intent has not been previously reported.
Investor documents said Rain could deliver its first hardware to customers as early as October next year. OpenAI spokesperson Kayla Wood issued a statement saying the company had not proceeded with Rain. “More than four years ago we signed a non-binding letter of intent with Rain to engage in discussions around a written agreement; we did not move forward with next steps,” the statement read. “We are open to future discussions with Rain.” Rain CEO William Passo said the startup “looks forward to future conversations with OpenAI and others about how our technology could drive the future of AI.”
OpenAI’s letter of intent with Rain highlights how Altman’s network of personal investments can overlap with his role as CEO. His prior role leading startup incubator Y Combinator made him a prominent dealmaker in Silicon Valley, investing in dozens of startups and brokering relationships between entrepreneurs and major corporations. That mix of responsibilities and potential conflicts played some part in his recent ouster by OpenAI’s board for a lack of candid communication, according to people briefed on the matter who were not authorized to discuss it publicly.
The Rain deal also underscores OpenAI’s willingness to consider significant spending to secure chip supplies needed to support advanced AI projects. Altman has publicly warned of a “brutal crunch” for AI chips and criticized their “eye-watering” costs. OpenAI relies on Microsoft’s powerful cloud infrastructure—Microsoft is its primary investor—but has frequently limited access to ChatGPT features due to hardware constraints. In a private meeting with developers, Altman said the pace of AI progress may depend on new chip designs and resilient supply chains.
Earlier this year Rain briefed potential investors on progress and predicted it could “tape out” a test chip as soon as this month, a key milestone indicating a design is ready for manufacturing. The startup has, however, recently reshaped its leadership and investor base after a U.S. government body that reviews investments for national security risks reportedly ordered Prosperity7 Ventures, a fund with Saudi ties, to divest its stake. Prosperity7 had led a $25 million round announced by Rain in early 2022.
The forced divestiture of that fund, first reported by Bloomberg and described in documents seen by WIRED, could complicate Rain’s path to bringing a new chip technology to market and potentially delay the day OpenAI could realize the benefit of its $51 million pre-order. Silicon Valley-based Grep VC acquired the shares; the firms involved did not respond to requests for comment.
U.S. concern over Prosperity7’s investment in Rain also raises questions about Altman’s efforts to expand global AI chip capacity. He has reportedly held talks with Middle Eastern investors in recent months about raising funds to launch a new chip company to help OpenAI and others diversify beyond reliance on Nvidia GPUs and specialized chips from Google, Amazon, and a few smaller suppliers, according to two people familiar with the private conversations.
Brain Trust
Founded in 2017, Rain claims its neuromorphic NPUs can deliver potentially 100 times more computing power and, for training, up to 10,000 times greater energy efficiency than GPUs—the graphics processors that have become the workhorses for AI developers and are primarily supplied by Nvidia.
Altman led one of Rain’s seed financing rounds in 2018, the company has said, a year before OpenAI agreed to the $51 million spend on its chips. Rain now employs about 40 people, including experts in both AI algorithm development and traditional chip design, according to investor disclosures.
The startup quietly changed CEOs this year. Founding CEO Gordon Wilson is listed as executive advisor on Rain’s website, while former general counsel William Passo was elevated from COO to CEO.
Wilson confirmed his departure in a LinkedIn post but did not give a reason. “Rain is ready to build a product that will define new AI chip markets and massively disrupt incumbents,” he wrote. “As I move on, I will continue to help Rain in any way I can.” More than 400 LinkedIn users, including several who list themselves as Rain employees, reacted to or commented on the post—Passo did not appear among them. Wilson declined to comment for this story.
The company said in an October update that it will seek an industry veteran to permanently replace Wilson.
Rain’s initial chips are based on the open-source RISC-V architecture, a design approach adopted by Google, Qualcomm and other tech firms, and are aimed at edge devices—hardware located far from datacenters, such as phones, drones, cars and robots. Rain aims to produce a chip capable of both training machine learning models and running them in production. Most edge chips today, including smartphone processors, focus on inference rather than training. It is unclear how OpenAI would have used Rain’s chips.
Rain has at one point told investors it held advanced discussions to sell systems to Google, Oracle, Meta, Microsoft and Amazon. Microsoft declined to comment, and other companies did not respond to requests for comment.
Security Concerns
The Prosperity7-led funding round announced last year brought Rain’s total financing to $33 million as of April 2022. That runway was projected to last into early 2025 and valued the company at $90 million, not including the newly raised capital, according to the investor disclosures. The documents cited Altman’s personal investment and Rain’s letter of intent with OpenAI as reasons to back the startup.
In a Rain press release about the fundraising, Altman praised the team for building a prototype in 2021 and said the technology “could substantially reduce the cost of creating powerful AI models and, hopefully one day, help enable true artificial general intelligence.”
Prosperity7’s investment attracted the attention of the interagency Committee on Foreign Investment in the United States (CFIUS), which can block or require changes to transactions it deems a national security risk.
CFIUS has long been concerned about access to advanced U.S. semiconductors, and officials have increasingly worried that intermediary actors in the Middle East could be used to quietly transfer critical technology to rival states, experts say. “The government doesn’t care about the money,” one advisor noted. “It cares about access and control and the power of the foreign party.”
Rain previously accepted a small seed investment from Baidu’s venture arm without issue, but the larger Saudi investment raised significant concerns. Prosperity7, an arm of Aramco Ventures within the state-owned Saudi Aramco, could have positioned Middle Eastern companies as customers while also placing Rain in close contact with the Saudi government.
A CFIUS spokesperson said the panel is “committed to taking any necessary actions within its authority to protect U.S. national security,” but added that, consistent with law and practice, it does not comment publicly on transactions it may review.
CFIUS disclosures show the committee reviews hundreds of transactions annually and, when it identifies concerns, typically crafts mitigation measures—such as blocking a foreign investor from taking a board seat. It is unclear from available records why CFIUS required a full divestiture in Rain’s case.
Three lawyers familiar with sensitive transactions said they could not recall prior cases in which CFIUS fully blocked a Saudi-linked deal. “Full divestitures have been quite rare over the last 20 years and have mostly been reserved for Chinese investors,” said one international trade and national security lawyer.
If OpenAI seeks to ensure stable access to specialized hardware, it will likely need partners with deep pockets. Competitors Amazon and Google have invested years and substantial revenue into developing their own custom AI chips and can finance those efforts through lucrative core businesses. Altman has not ruled out the possibility of OpenAI building its own chips, but doing so would require significant capital and operational resources.