TheChek News Flow

Last week, I reported on how OpenAI updated its financial forecasts for investors. The company expects to spend nearly $115 billion between 2025 and 2029. That’s $80 billion more than it forecast in the first quarter.

As the chart shows, the startup—recently valued at $500 billion in a sale of employee shares—has been able to handily raise more money as those costs have risen. The tens of billions more needed imply that the company could look beyond venture capital, say by entering into project financing arrangements that use debt, to fund its soaring costs to run its models as well as costs related to data centers to house its servers.

OpenAI has already raised about $38 billion in funding from Microsoft, Thrive Capital, SoftBank and others, mostly in the last two years, as the success of ChatGPT and new competition from xAI, Google and Meta Platforms drove up its technology costs.

Some of that money is part of an ongoing $41 billion round that will include $30 billion from lead investor SoftBank. The financing, which should close by the end of the year, hinges on restructuring the startup’s for-profit entity so it can eventually go public.

When it completes the SoftBank-led funding, it will have raised about $60 billion altogether, including billions of dollars in 2019, 2021 and 2023 from Microsoft in both cash and credits to use its Azure cloud services. OpenAI had roughly $7.6 billion in cash on its books at the end of last year.

At the rate of its projected cash burn, or negative free cash flow, its funding will last into 2027, when the company had previously told investors it expects to raise another $17 billion. It is not clear if the company still plans that funding.

The rate of cash burn could increase even more as OpenAI’s business grows, of course. Already, its revenue has rapidly increased to about $12 billion on an annualized basis as of July. The company projected $13 billion in total revenue this year, up three and a half times from last year and higher than an earlier forecast, and expects to generate about $200 billion in revenue in 2030, with ChatGPT as the largest revenue driver.

Meanwhile, it’s been increasing forecasts for cash burn. As of July, it expected to burn over $8 billion this year compared to about $2 billion last year. In comparison, in 2023, OpenAI burned just $200 million! And as we reported Friday, OpenAI expects cash burn to rise to more than $17 billion next year, about $10 billion more than its earlier projections.

A major reason is OpenAI’s spending on computing. The company has told investors that training costs, or the costs to develop artificial intelligence models, and inference costs, the costs of running AI products such as ChatGPT, would amount to roughly $16 billion this year, up from about $4 billion last year.

These costs will rise dramatically in the coming years, the company has disclosed. Its executives have indicated they’ll need more money to support the growth of ChatGPT and to develop more-advanced AI.

At the same time, OpenAI has committed to investing about $18 billion in developing data centers, using money drawn from its $41 billion fundraise, alongside investments from SoftBank, Oracle and United Arab Emirates investment firm MGX.

The war for AI talent is also expensive. OpenAI spent roughly $700 million on employee salaries last year and told investors in the first quarter it expected to spend $1.5 billion this year, which has likely gone up with the fierce competition for talent from Meta and others.

And that’s not including stock-based compensation, which the company projected to be about $6 billion this year but which isn’t a cash expense. Still, stock based compensation can eventually dilute the value of existing stockholders’ shares when the company goes public.

Investors, get your checkbooks ready.

The landmark agreement could see Air Cambodia buy up to 20 of the jets, highlighting Comac’s growing presence in the region

Chinese-made aircraft are set to spread their wings further in Southeast Asia after Air Cambodia announced what could become the largest ever overseas order for C909 passenger jets.

The airline has signed a memorandum of understanding with the Commercial Aircraft Corporation of China (Comac) for 10 of the jets, with the option to buy 10 more.

“The two sides will closely cooperate on aircraft introduction, operational support and industry development,” according to an online statement by Comac, the Shanghai-based manufacturer that also produces the single-aisle C919 passenger jet.

Announced on Tuesday, the deal made Cambodia the fourth Southeast Asian nation to accept Comac’s nine-year-old regional jet, previously known as the ARJ21, following Indonesia, Laos and Vietnam.

The C909 has a capacity of 78 to 97 seats and was built for short flights of 2,225km to 3,700km (1,380 to 2,300 miles). By July, Comac had delivered 166 of the jets, which have carried more than 24 million passengers on more than 700 routes.

The plane maker has sought to deepen its foothold in the 700 million population Southeast Asia market, opening representative offices in Hong Kong and Singapore last year.

Indonesia’s TransNusa, Lao Airlines and Vietnam’s VietJet collectively operate seven C909 aircraft on 15 routes connecting 18 cities in the region.

The jets have flown in Southeast Asia for the past decade, logging 470,000 passenger trips, according to the Civil Aviation Administration of China.

Also on Tuesday, Comac announced the delivery of its first C909 medical aircraft in Zhengzhou, Henan province, to China Flying Dragon General Aviation, a local carrier with experience in emergency air transport.

The jet would be used in rescue operations, long-range medical support and critical patient transfers. Comac called the delivery “a new milestone in broadening the line-up of China’s home-grown commercial aircraft”.

The model has a maximum payload of 10 tonnes, a range of up to 3,700km (2,300 miles) and can operate from airports located above 2,438 metres (7,998 feet). Its cabin can be reconfigured for various rescue needs, from transporting medical teams and providing aid in remote areas to patient transfers.

Comac said the operator would help build a nationwide air medical rescue network, expand services to Belt and Road Initiative countries and gradually establish a model with global reach.

“The delivery of the C909 medical jet will add a new option for strengthening China’s air medical support system and improving emergency response capabilities,” Comac added.

State broadcaster CCTV reported a day earlier that the aircraft had flown from Shanghai’s Pudong Airport to Shihezi in Xinjiang on a two-day medical mission.

According to the report, the jet had carried a team of specialists and advanced equipment, using a domestically developed 5G telemedicine system to treat patients in the remote western region. It also featured a space for training local doctors.

Comac began developing the C909 in 2002. The state-owned manufacturer is seen as a potential challenger to the Airbus-Boeing duopoly in the global aviation market, but its larger C919 narrowbody aircraft – comparable to the Airbus A320 and Boeing 737 – has yet to secure buyers outside China.