Rain Neuromorphics is a startup designing chips that mimic the way the human brain works.

The Biden administration has compelled Saudi Aramco (TADAWUL: 2222)-backed venture capital firm, Prosperity7, to divest its shares from Rain Neuromorphics, a Silicon Valley AI chip startup supported by Sam Altman, the co-founder of OpenAI. Rain Neuromorphics, which focuses on designing chips emulating the brain’s functionality to serve companies utilizing artificial intelligence (AI) algorithms, secured $25 million in funding in 2022. (Reuters/Bloomberg)

Prosperity7, a major investor in Rain AI’s $25 million funding round, sold its shares following a review by the Committee on Foreign Investment in the United States (CFIUS), an agency responsible for assessing deals with national security implications. The Saudi fund was instructed by CFIUS, a U.S. watchdog, to unwind the deal over the past year, according to sources cited by Bloomberg News.

Notably, CFIUS operates as an inter-agency committee overseeing foreign investments in U.S. businesses and real estate to address national security concerns. The U.S. Treasury, responsible for CFIUS, emphasized its commitment to safeguarding national security without providing specific details on the reviewed transactions.

This move by the U.S. follows previous actions in August, where export restrictions on advanced artificial intelligence chips from companies like Nvidia and Advanced Micro Devices were expanded to include some Middle Eastern countries. These developments collectively signal a potential impact on AI development in the Middle East.

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Image by Gerd Altmann from Pixabay