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OpenAI chief pursues investors including the U.A.E. for a project possibly requiring up to $7 trillion

Sam Altman was already trying to lead the development of human-level artificial intelligence. Now he has another great ambition: raising trillions of dollars to reshape the global semiconductor industry.

The OpenAI chief executive officer is in talks with investors including the United Arab Emirates government to raise funds for a wildly ambitious tech initiative that would boost the world’s chip-building capacity, expand its ability to power AI, among other things, and cost several trillion dollars, according to people familiar with the matter. The project could require raising as much as $5 trillion to $7 trillion, one of the people said.

The fundraising plans, which face significant obstacles, are aimed at solving constraints to OpenAI’s growth, including the scarcity of the pricey AI chips required to train large language models behind AI systems such as ChatGPT. Altman has often complained that there aren’t enough of these kinds of chips—known as graphics processing units, or GPUs—to power OpenAI’s quest for artificial general intelligence, which it defines as systems that are broadly smarter than humans.

Such a sum of investment would dwarf the current size of the global semiconductor industry. Global sales of chips were $527 billion last year and are expected to rise to $1 trillion annually by 2030. Global sales of semiconductor manufacturing equipment—the costly machinery needed to run chip factories—last year were $100 billion, according to an estimate by the industry group SEMI.

The amounts Altman has discussed would also be outlandishly large by the standards of corporate fundraising—larger than the national debt of some major global economies and bigger than giant sovereign-wealth funds.

Total U.S. corporate-debt issuance last year was $1.44 trillion, according to the Securities Industry and Financial Markets Association. The combined market capitalization of Microsoft and Apple, the two highest-valued businesses in the U.S., is roughly $6 trillion.

The fundraising talks are the latest example of ambitious plans from Altman that seek to change the world. Besides kicking off the generative AI revolution in late 2022 with OpenAI’s public release of ChatGPT—an early step in its effort toward building human-level artificial intelligence—he has invested heavily in startups aiming to make cheap energy from nuclear fusion and extend the human lifespan by a decade.

Energy also factors into Altman’s new fundraising plans because AI facilities consume enormous amounts of electricity.

Realizing his ambitions for chips and other areas needed to support AI would require persuading a complex, globe-spanning network of funders, industry partners and governments—including getting the assent of the U.S., for which the semiconductor industry is a strategic priority. Altman met with Commerce Secretary Gina Raimondo and discussed the initiative, according to people familiar with the matter.

“OpenAI has had productive discussions about increasing global infrastructure and supply chains for chips, energy and data centers—which are crucial for AI and other industries that rely on them,” said an OpenAI spokeswoman. “We will continue to keep the U.S. government informed given the importance to national priorities, and look forward to sharing more details at a later date.”

As part of the talks, Altman is pitching a partnership between OpenAI, various investors, chip makers and power providers, which together would put up money to build chip foundries that would then be run by existing chip makers, some of the people said. OpenAI would agree to be a significant customer of the new factories. Much of the effort could be funded by debt, one of the people said. The discussions are in their early stages, the full list of potential investors isn’t known, and the effort could span years and ultimately might not succeed.

Concern about the supply of chips and the electricity needed to run them has grown in the midst of surging demand for artificial intelligence. Chips from Nvidia, the market leader in AI computation, have been in short supply. AI chips have also become part of the geopolitical battle between the U.S. and China for tech dominance, and the U.S. has placed restrictions on their export to adversaries.

In recent weeks, Altman has met with several players in his effort, notably the U.A.E.’s Sheikh Tahnoun bin Zayed al Nahyan, according to some of the people familiar with the matter. He is that country’s top security official, brother of U.A.E. President Mohamed bin Zayed al Nahyan, leader of a rapidly growing financial portfolio and the chair of numerous vehicles of Abu Dhabi’s sovereign wealth.

The U.A.E. government would be an important part of the effort, assuming that the U.S. government allows it to play such a role, one of the people said.

Altman has also met with Masayoshi Son, the CEO of SoftBank, and with representatives from chip-fabrication companies including Taiwan Semiconductor Manufacturing Co., also known as TSMC, to discuss the venture.

In talks with TSMC, Altman has said he wants to build dozens of chip-fabrication plants in the next few years, the people said. His vision would be to raise the money from Middle East investors and have TSMC build and run them.

Bloomberg earlier reported Altman’s talks with Middle East investors and SoftBank about a chips venture. The Financial Times earlier reported Altman’s talks with Sheikh Tahnoun and TSMC.

OpenAI so far has developed its AI technology using the computing resources of its partner Microsoft, whose valuation recently surpassed $3 trillion, partly because of investor enthusiasm about its AI efforts and relationship with OpenAI.

Microsoft is aware of OpenAI’s efforts to raise funds to expand chip capacity and supports them. Altman has shared his plans with Microsoft CEO Satya Nadella and Chief Technology Officer Kevin Scott, said a person familiar with those discussions.

Among the many tricky questions facing Altman’s effort is where new chip plants would be built. He would prefer the U.S., where the Biden administration already is expected to award billions of dollars in subsidies to TSMC and other major chip makers in coming weeks, to fund new factories.

But those companies face challenges expanding in the U.S. TSMC for example has pointed to delays, a shortage of skilled workers and high costs at its $40 billion project in Arizona.

The U.S. government has been wary of allowing certain foreign governments to control the strategically important supply of microchips that power the digital economy.

G42, an Abu Dhabi-based tech company chaired by Sheikh Tahnoun, announced a partnership with OpenAI in October to “deliver cutting-edge AI solutions to the U.A.E. and regional markets.”

Some in the U.S. government have been concerned about Abu Dhabi’s getting a large foothold in the AI market. ​​In January, Rep. Mike Gallagher (R., Wis.), the chairman of the House Select Committee on the Chinese Communist Party, sent a letter to Raimondo urging the Commerce Department to investigate G42’s ties to China and consider trade restrictions against the company. G42 declined to comment on the chips initiative and didn’t immediately respond to a request for comment on Gallagher’s letter.

President’s decision to halt new export terminals follows an intense campaign by environmental groups funded by wealthy contributors

Charities controlled by members of the Rockefeller family and billionaire donors were key funders of a successful campaign to pressure President Biden to pause new approvals of liquefied natural gas exports from the U.S.

The Rockefellers, along with other wealthy donors including the philanthropy of Michael Bloomberg, have provided millions of dollars in recent years to front-line environmental groups that are campaigning against fossil-fuel projects, including LNG terminals that have been proposed on the Gulf Coast, according to people familiar with the effort.

Some green funders hadn’t given much attention to the LNG exports until recently, in part because of ambivalence about the role natural gas should play in the energy transition. Plus, some previous campaigns to kill LNG terminals had been unsuccessful, damping some donors’ and large environmental organizations’ appetite for taking on the industry.

The billionaire-backed campaign, starting around four years ago, worked to identify and fund community leaders already campaigning against fossil-fuel projects. The activists buttonholed White House and federal officials in Washington, Houston and Dubai as part of a high-intensity grassroots campaign.

Biden last month effectively froze the approval process for new LNG terminals while his administration takes stock of the country’s newfound status as the world’s largest LNG exporter.

“They got our attention,” a senior Biden administration official said of the activists’ efforts, describing the campaign as intense.

Administration officials said they were influenced by the environmental groups’ push. But the campaign wasn’t the only factor in Biden’s decision to pause new LNG approvals, which they said came amid new research on the emissions from LNG facilities, as well as an interest in better understanding how LNG exports affect the U.S. economy and national security.

A White House spokesman didn’t respond to a request for comment.

Biden’s decision angered oil-and-gas companies and prompted House Republicans critical of the decision to hold a hearing on Tuesday. Sen. Joe Manchin (D., W.Va.) has said he would investigate the decision and will hold a hearing on Thursday.

Community leaders have for years fought the expansion of LNG facilities, but some large donors steered away from funding a fight they perceived as having low odds of success, environmentalists said.

Sparking some of the funders’ new interest in a campaign was a realization that a push to reduce greenhouse gases in the U.S. was prompting oil-and-gas companies to export more of their products abroad, which still increases overall global emissions, according to people familiar with the matter.

In 2018, the Rockefeller Family Fund, a charity created by some of the heirs of John D. Rockefeller, launched an initiative called the Funder Collaborative on Oil and Gas to call attention to the U.S.’s status as an oil-and-gas juggernaut and encourage green funders to do more. Some of the Rockefeller heirs have campaigned for years against Exxon Mobil, a successor to Standard Oil, the fossil-fuel monopoly founded by the Rockefeller patriarch.

Bloomberg, the former mayor of New York City and founder of his eponymous company, has put money into green causes for years, and his Bloomberg Philanthropies has contributed to the initiative.

The Funder Collaborative circulated a memo in 2019 to nongovernmental organizations to assess interest in a broad campaign to take on the LNG industry.

The initiative dispatched scouts to the Gulf Coast, where several facilities crank out LNG, and developers plan to build at least a dozen more. They met with front-line leaders opposed to the projects, and started making grants to their organizations.

Among them was Roishetta Ozane, a single mom of six from Sulphur, La., who has emerged as one of the campaign’s foremost voices. The environmental-justice activist had for years been trying to alert large environmental groups about a fossil-fuel expansion in southwestern Louisiana, largely in vain, she said.

“Funders like to fund if they feel like they’re going to win, and they didn’t feel like they were going to win against LNG,” she said.

In 2021, she gave representatives of the Funder Collaborative and the Hive Fund for Climate and Gender Justice, an organization funded in part by Amazon.com’s billionaire founder, Jeff Bezos, a tour of communities near fossil-fuel facilities. Her organization, the Vessel Project of Louisiana, received grants from these groups, as well as from Bloomberg Philanthropies’ Beyond Petrochemicals campaign.

In Washington, Ozane rallied in front of the Federal Energy Regulatory Commission, an independent agency that approves LNG plants. She also targeted the Energy Department, which grants export licenses to LNG facilities. Ozane met several times with Shalanda Baker, the director of the DOE’s Office of Economic Impact and Diversity.

Others also applied pressure. James Hiatt, an activist from Lake Charles, La., asked Energy Secretary Jennifer Granholm as she visited the state to reject new LNG projects, and John Beard, an activist from Port Arthur, Texas, spoke to White House adviser John Podesta at the COP 28 climate summit in Dubai.

Last fall, CP2, a planned LNG facility in Louisiana, became a hashtag on TikTok as Gen Z climate activists lambasted the project. The climate activist and author Bill McKibben helped rally climate groups and had a few short conversations with Biden officials, he said.

Democrats, meanwhile, lobbied Biden’s top advisers to halt the LNG expansion. Sen. Jeff Merkley (D., Ore.), who had opposed an LNG project in his home state, heard from some of the groups and personally lobbied Podesta, he said.

In late January, Biden announced the pause on new LNG export licenses, earning plaudits from environmental groups, which described the move as a historic decision.

A few days after the announcement, Sarah Brennan, an associate director at the Rockefeller Family Fund, celebrated the win.

“The pause…is the result of a sustained four-year push that built upon years of opposition to gas exports by community groups and lawyers,” she wrote in an email to environmental groups.

“The White House recognized the power [of] this campaign.”

Currency has climbed nearly 3% this year, handing losses to speculators who were positioned for a decline

Hedge funds have torn up their bets against the dollar after the US economy’s unexpected resilience sparked a rebound for the greenback in the first six weeks of the year.

Citibank, one of the world’s largest foreign exchange trading banks, said that hedge funds had switched from positioning for a decline to betting on the dollar’s appreciation.

Funds have “closed all of their short US dollar exposure in aggregate”, with their long positions now equal to more than 80 per cent of their maximum exposure over the past year, according to Citi. Late last year, they had smaller negative wagers as investors prepared for a rapid series of interest rate cuts by the Federal Reserve.

“The consensus view of dollar weakness coming into the year was wrong and people have flipped their positions,” said Sam Hewson, head of FX sales at Citi, adding that a lot of hedge funds had been forced to cover their shorts as “the early 2024 playbook was adjusted”.

The dollar has climbed nearly 3 per cent so far this year, boosted by strong economic data, including blockbuster jobs figures last week that punctured hopes of a sharp fall in borrowing costs in the world’s largest economy.

Federal Reserve officials have also been pushing back against a slew of rate cuts priced by markets this year. On CBS’s 60 Minutes, aired on Sunday, Fed chair Jay Powell said that he expected about three quarter-point rate cuts this year. Markets are pricing in four or five rate reductions, down from six or seven late last year.

FX strategists at JPMorgan, another big foreign exchange trading bank, said that in futures markets, short positions on the dollar had now “neutralised”.

JPMorgan expects the dollar index — a gauge of the currency’s strength against a basket off rivals — will rise from its current level of 104 to between 106 and 108 by the end of June, driven by the relative strength of the US economy.

The IMF last week raised its US growth projection for 2024 to 2.1 per cent, up from a previous forecast of 1.5 per cent in October. For the euro area, it cut its growth projection to 0.9 per cent from 1.2 per cent.

“There’s a substantial amount of US growth exceptionalism relative to China and Europe and that just isn’t going away,” said Meera Chandan, co-head of global FX strategy at JPMorgan, adding she thinks the euro could fall to parity with the dollar this year, from its current level of $1.077.

The possibility of a Donald Trump victory in this year’s presidential election — in particular the former president’s pledge to impose tariffs on imports to the US — could also become a tailwind for the dollar.

Chandan said tariffs would be likely to hurt the economic growth of US trading partners, weakening their currencies against the greenback.

The predictions of a rising dollar come after investors were stunned last week when official figures showed the US economy had added 353,000 jobs in January, almost twice as many as forecast. 

“The market [previously] had a tendency to shrug off some of the better economic data as being an anomaly,” said Jane Foley, head of FX strategy at Rabobank. “The payrolls data last week was so strong [that it] was impossible to shrug off. The market couldn’t avoid the assumption that the US economy is going to be stronger for longer.”

STEP is successor to 40-year-old record-breaking EU project in Oxfordshire

A UK venture to build the world’s first fusion power plant will take centre stage this week as its EU-backed predecessor winds down after 40 record-breaking years.

The new Spherical Tokamak for Energy Production (STEP) project to be built in Nottinghamshire aims to use pioneering reactor technology in a bid to finally prove fusion’s promise as a safe and potentially inexhaustible source of low-carbon energy. 

STEP succeeds the Joint European Torus (JET) project outside Oxford, which conducted its last experiment in December and will announce final “milestone results” on Thursday.

The transition comes at a time when climate change and geopolitical conflict have encouraged a wave of public and private investment in the field of fusion research.

“The global interest in fusion . . . has gone through an extraordinary transformation over the last few years,” said Tim Bestwick, deputy chief executive of the UK Atomic Energy Authority (UKAEA), which runs Britain’s fusion programme.

“The thing that’s changed most is the widespread realisation that we need something with the attributes of fusion energy to get us out of the challenges we have on both security and low-carbon energy,” he said.

Fusion’s great promise is that by recreating the reaction that generates the Sun’s heat, power stations will be able to produce abundant energy anywhere in the world.

The process involves heating a plasma of two hydrogen isotopes — normally deuterium and tritium — to extreme temperatures so that they fuse, producing helium and neutrons.

The reaction creates no long-lived radioactive waste, the isotopes can be sourced in large quantities, and a small cup of the fuel has the potential to power a house for hundreds of years.

However, after four decades of experiments the technology is still years away from proving it can generate commercially viable power.

The UK has been at the forefront of fusion research in large part because of the decision to build JET — a collaboration between EU member states, Switzerland, the UK and Ukraine — just outside Oxford in the early 1980s.

It was opened by Queen Elizabeth II in 1984, created the first deuterium-tritium plasma in 1991 and delivered a world record for energy output in 1997. JET set another landmark in 2021, producing enough energy in a five-second reaction to boil about 60 kettles, although that was still far less energy than the experiment consumed.

Melanie Windridge, chief executive of advisory group Fusion Energy Insights, said JET had been “running and doing cutting-edge physics for decades, and decades longer than was ever intended”.

Under the government’s current timeline, the STEP machine will not start operating until the early 2040s. But environmental and political urgency could bring that forward.  

“We’re going to look very closely at the opportunity to accelerate the progress,” said David Gann, inaugural chair of UK Industrial Fusion Solutions, the government body responsible for delivering the plant.

Whereas JET was an experimental machine, the principal objective of STEP is to produce electricity for the grid in a way that makes commercial sense. It will be built on the site of a decommissioned coal-fired power plant.

Artificial intelligence, particularly machine learning, is set to play a key role in STEP, enabling scientists to test digital versions of the technology before committing to a design, Gann said.

STEP, like JET, will be a type of fusion machine known as a tokamak. But while JET and the roughly 50 other working tokamaks in the the world are doughnut-shaped, STEP will be spherical like an “apple with a slender core”, said Gann.

By bringing the superheated plasma closer to the wall of the machine, spherical tokamaks can in theory be more compact and use smaller, less expensive magnets. That could make them easier to commercialise, although they will require immense feats of engineering.

Tokamaks heat the plasma to temperatures 10 times greater than the centre of the Sun and use liquid helium at a temperature close to absolute zero — minus 273C — as a coolant for their superconducting magnets. 

“Within two metres of each other you have got the hottest place in the solar system and some of the coldest temperatures on earth,” said Joe Milnes, former head of JET operations and now executive director for engineering and computing at the UKAEA. “How do you make a machine that can deal with this challenge? You have to crack on and make it happen.”

One advantage of fusion is that, unlike nuclear fission, it does not create radioactive spent fuel that needs to be stored in secure silos for thousands of years. 

Tritium is mildly radioactive but when the Financial Times visited the Oxfordshire facility, it was possible to pass beyond the giant concrete shield doors and into the tokamak’s vast hangar, even though the last reaction had taken place less than five weeks previously. 

JET’s final task will be to disassemble the tokamak, the first time such a full decommissioning has been tried. That should yield valuable new insights, not least for the robotic techniques that will be used in the process. 

Some fusion industry executives have questioned the UK’s decision to focus on a single fusion project. The US government, in contrast, is backing several start-ups employing different approaches.

Windridge at Fusion Energy Insights dismissed those concerns. “We can talk for decades about which option might be the best but ultimately you have got to build things, you have got to try things and see what works,” she said.

STEP will now take up the big challenge of making the long-held dream of fusion energy a reality, despite the multiple forbidding obstacles. 

“It’s a quest,” said Bestwick of the UKAEA. “And we think that quest is worth it.”

Experiment was ‘fitting swansong’ for UK’s JET facility outside Oxford

European scientists have set a new record for the amount of energy generated from nuclear fusion, another sign of progress in a decades-long effort to produce power by harnessing the reaction that powers the sun.

Researchers at the Joint European Torus facility outside Oxford generated 69 megajoules from a sustained fusion reaction lasting five seconds — enough energy to boil about 70 kettles — surpassing their previous record of 59 megajoules set in 2021.

The latest achievement came in December during the final set of experiments to be conducted at JET, which will be decommissioned this year.

But scientists remain a long way from harnessing fusion power to make it commercially viable. The JET experiment in December consumed far more power than the reaction produced. To build a power station, scientists and engineers must also figure out how to sustain the reactions for longer.

A collaboration between EU member states, Switzerland, the UK and Ukraine, JET has been the world’s largest, most powerful operational “tokamak” machine since it became operational in 1983 and set its first record for energy output in 1997.

The tokamak design, pioneered by Soviet scientists in the 1950s, uses powerful magnets to hold a plasma of two hydrogen isotopes — deuterium and tritium — in place as it is heated to temperatures hotter than the sun so that the atomic nuclei fuse, releasing energy.

“JET’s final fusion experiment is a fitting swansong after all the groundbreaking work that has gone into the project since 1983,” said Andrew Bowie, UK minister of nuclear and networks.

For decades plasma physicists have argued that fusion reactions will one day provide a safe and potentially inexhaustible source of low-carbon energy.

Unlike fission — the process harnessed by nuclear power stations in which atoms are split — fusion produces no long-lived radioactive waste. The isotopes can be sourced in large quantities, and a small cup of the fuel has the potential to power a house for hundreds of years.

Experts welcomed Thursday’s announcement as a further sign of progress.

“JET has operated as close to power plant conditions as is possible with today’s facilities, and its legacy will be pervasive in all future power plants,” said Sir Ian Chapman, chief executive of the UK Atomic Energy Authority, which runs Britain’s fusion programme. “It has a critical role in bringing us closer to a safe and sustainable future.”

JET is due to be replaced by a UK programme, known as the Spherical Tokamak for Energy Production (STEP) project, to be built on the site of a decommissioned coal-fired power station in Nottinghamshire. The government hopes STEP will become one of the first fusion machines in the world to supply power to the grid by the early 2040s.