OpenAI eyes $100 billion valuation in fresh funding talks, considers chip venture

San Francisco: OpenAI, maker of ChatGPT, is reportedly engaged in preliminary discussions to secure a new round of funding valued at or surpassing $100 billion.

The potential fundraising initiative has attracted the attention of various investors, although specific details such as terms, valuation, and the timing of this prospective funding round remain under consideration and are subject to change.

If this funding round materialises as planned, it is anticipated to propel OpenAI to become the second most valuable startup in the United States, trailing only Elon Musk's Space Exploration Technologies, based on data from CBInsights.

OpenAI declined to provide any comments on these discussions.

Separately, the company is expected to conclude a distinct tender offer in early January, allowing its employees to sell their shares at a valuation of $86 billion. This transaction, led by Thrive Capital, reportedly witnessed a surge in investor interest surpassing the available shares.

OpenAI's escalating valuation echoes the fervour sparked by its release of ChatGPT a year ago, an AI-driven chatbot capable of crafting human-like sentences and poetry in response to simple prompts. This innovation solidified the company's position as a leading startup in Silicon Valley, raising a total of $13 billion in funding to date, primarily from Microsoft. Subsequently, it sparked a heightened interest in the potential of AI, leading to significant shifts in the tech industry landscape.

In a move paralleling OpenAI's rise, competitors such as Amazon.com and Alphabet have made substantial investments in rivals like Anthropic. Salesforce spearheaded an investment in Hugging Face, valuing the company at $4.5 billion. Meanwhile, Nvidia, a key player in AI-focused semiconductor manufacturing, revealed numerous investments made throughout 2023.

Moreover, OpenAI has explored the prospect of securing funding for a novel chip venture in collaboration with Abu Dhabi-based G42, as revealed by insiders familiar with the matter.

Sources indicated that discussions involved seeking an investment ranging between $8 billion and $10 billion from G42 for the chipmaking venture, potentially named Tigris. It remains unclear whether this initiative aligns with the broader funding efforts of the company.

OpenAI's CEO, Sam Altman, has reportedly been engaged in sourcing capital for the chipmaking project, aiming to develop semiconductor technology capable of competing with Nvidia, a dominant force in the AI chip market.

Earlier announcements confirmed a partnership between G42 and OpenAI, targeting the delivery of advanced AI solutions to the UAE and surrounding markets. This collaboration, announced in October, lacked specific financial details. G42, established in 2018, is spearheaded by Sheikh Tahnoon bin Zayed Al Nahyan, the UAE's national security adviser, and chair of the Abu Dhabi Investment Authority.

OpenAI encountered a brief period of uncertainty after abruptly removing Altman from his CEO position last month, leading to concerns among investors. However, following a leadership reshuffle and Altman's reinstatement, the company aims to signal a renewed focus on product development, reassuring its customers amidst the recent turbulence.