Rumors about Sam Altman's chip production ambitions have been circulating for a while, and now they are finally taking shape. Apparently, Sam Altman is not going to establish a company that would develop and build processors for artificial intelligence (AI). What he is working on is a very ambitious effort: He wants to raise $5 trillion to $7 trillion to build a network of fabs run by foundries that would produce chips not only for OpenAI, but for others, too, reports the Wall Street Journal. If he succeeds, the project will reshape the whole semiconductor industry.
Sam Altman is reportedly exploring a collaborative venture that would connect OpenAI, various investors, contract chip manufacturers, and power providers to build a network of fabs that would make ample use of chips for OpenAI (the company will commit to become a significant client for these chip plants) and other clients. The fabs will be operated by existing foundries (the WSJ specifically mentions TSMC, which is reportedly a company that Altman had met in recent weeks), whereas power plants for these fabs will be run by other companies. The whole project will require investments between $5 trillion to $7 trillion, according to the WSJ.
This fundraising target is exceptionally high, dwarfing the current valuation of the global semiconductor industry, which stood at $527 billion in sales last year, with projections to reach $1 trillion by 2030. Meanwhile, chipmakers spent $99.5 billion on fab equipment in 2022 and are expected to spend $97 billion on fab tools this year.
At present, a leading-edge semiconductor production facility costs from $20 billion to $30 billion, but going forward they are going to get considerably costlier. There is no information about how many fabs Altman is envisioning and over how many years, but the $5 trillion to $7 trillion estimations probably include building not only the fabs themselves, but a whole new infrastructure around them, which includes power plants, over several years. One of the many remaining questions is where those fabs will be located.
Funding strategies may include leveraging debt, but the project is still in the preliminary discussion phase, with many uncertainties regarding investor participation and long-term success.
Altman has been meeting with various high-level investment figures to talk about the project, including Sheikh Tahnoun from the UAE and Masayoshi Son from SoftBank. Meanwhile, the information about the potential venture is strictly unofficial at this point, so take it with a grain of salt.
A significant concern for this endeavor is the geopolitical sensitivity surrounding the semiconductor supply chain. The U.S. government exhibits caution over allowing foreign governments substantial influence in an industry pivotal to the digital economy's infrastructure. This factor adds a layer of complexity to Altman's vision, as he needs to find a balance between securing foreign investment and adhering to the national security interests of the U.S.
