OpenAI CEO leads Rain AI in raising $150M to challenge Nvidia's (NVDA.US) AI chip dominance

Microsoft-backed OpenAI CEO Sam Altman is actively raising $150 million for Rain AI, a semiconductor startup that aims to compete with Nvidia NVDA.US in the AI hardware market, according to people familiar with the matter. Rain AI is valued at $600 million in the funding, which signals further bets on energy-efficient and high-performance semiconductors.

Altman, the CEO of OpenAI, is not only a key driver of the funding for Rain AI but also a major investor in the company's first funding round in 2022, when it raised $25 million. A second round of investment is expected next month, according to reports. Altman has placed a high value on Rain AI's energy-efficient and high-performance semiconductor technology and has shown its potential to OpenAI's investors.

Rain AI, a new force in the AI hardware market, recently hired former Apple executive Jean-Didier Allegrucci to oversee its hardware engineering plans. The company confidently claims that its chips are more energy-efficient than Nvidia NVDA.US, the leader in the AI chip industry, and estimates it will capture 85% of the market share.

Meanwhile, OpenAI has received billions of dollars from Microsoft MSFT.US and continues to purchase AI accelerators from Nvidia to train its massive language models. In addition, the company has purchased processors from AMD AMD.US and is reportedly working with Broadcom AVGO.US to develop custom chips.

Nvidia NVDA.US is also strengthening its ties with Elon Musk, who plans to buy 100,000 Nvidia processors for xAI and other AI projects. Although Nvidia's relationship with OpenAI is expected to continue, the rise of Rain AI undoubtedly brings a new competitive landscape to this field.

Dan Ives, an analyst at Wedbush, noted that Rain AI is a legitimate player that cannot be ignored in the future development of AI and chips. In the early stage of the AI revolution, every move of Rain AI has been closely watched. He emphasized that the participants in this field are not limited to the so-called "father of AI" Huang Renjun and his Nvidia NVDA.US.