New York
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\n OpenAI, the world\u2019s leader and ChatGPT parent company, went into panic mode on Thursday over what it said was a very public misstatement.\n <\/p>\n
\n Two top executives furiously backtracked from an earlier comment that suggested OpenAI might need government support to cover the $1.4 trillion in chips and data center infrastructure it\u2019s committed to buying.\n <\/p>\n
\n Here\u2019s how the situation unfolded and why the since-retracted comment was so controversial.\n <\/p>\n
\n OpenAI\u2019s Chief Financial Officer Sarah Friar raised eyebrows on Wednesday when she suggested that the US government should \u201cbackstop\u201d the company\u2019s aggressive investments in artificial intelligence infrastructure.\n <\/p>\n
\n \u201cThe backstop, the guarantee, that allows the financing to happen, that can really drop the cost of the financing but also increase the loan-to-value, so the amount of debt that you can take on top of an equity portion,\u201d she said at a Wall Street Journal event<\/a>.\n <\/p>\n \n In other words: a federal government \u201cbackstop\u201d for the debt AI companies take on to make chip investments.\n <\/p>\n \n Friar quickly walked back the comments, clarifying in a LinkedIn post<\/a> that the government needed to \u201cplay their part\u201d in combination with the private sector to contribute to America\u2019s AI growth. But OpenAI was \u201cnot seeking a government backstop for our infrastructure commitments.\u201d\n <\/p>\n \n But that may have confused matters even further and added to a chorus of questions that have been growing in recent weeks about how the not-yet-profitable startup plans to pay for its AI data center and chip commitments.\n <\/p>\n \n Friar\u2019s initial comment took heat because it seemed to imply that the US government \u2014 and thus, taxpayers \u2014 should be on the hook if OpenAI can\u2019t figure out how to pay for all the chips it has said it will buy. Like, how your parents who co-signed on your lease would be responsible if you didn\u2019t pay your rent.\n <\/p>\n \n And that didn\u2019t sit well with many people, given that OpenAI is a private company valued at $500 billion, from which taxpayers wouldn\u2019t be seeing any direct benefit if it succeeds.\n <\/p>\n \n \u201cWill there be a political movement to forgive AI chip loans like student loans? Can OpenAI wind up in conservatorship like Fannie Mae and Freddie Mac?\u201d Jones Trading chief market strategist Mike O\u2019Rourke wrote in emailed commentary Wednesday. \u201cIt is absurd that OpenAI insiders think the U.S. government should furnish them with preferential borrowing rates while they get to grow the value of their privately held shares on the backs of American taxpayers.\u201d\n <\/p>\n \n What\u2019s more, the comments seemed to suggest \u2014 as many investors and Silicon Valley watchers have worried in recent months<\/a> \u2014 that OpenAI isn\u2019t quite sure how it will pay for its $1.4 trillion in infrastructure commitments without some creative maneuvering. That would be an issue for everyone, since it has been on a dealmaking spree<\/a> with Nvidia, AMD, Amazon and others, helping to prop up the stock market.\n <\/p>\n \n By Thursday, OpenAI CEO Sam Altman stepped in to try to further clarify the company\u2019s position on a government backstop. He revealed that the company expects to earn $20 billion in revenue this year and plans to grow to \u201chundreds of billions\u201d in annual revenue by 2030 with investments in things like enterprise AI and consumer devices.\n <\/p>\n \n Altman reiterated that the company \u201cdoes not have or want government guarantees for OpenAI datacenters.\u201d\n <\/p>\n \n \u201cWe believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market,\u201d Altman said in an X post<\/a>.\n <\/p>\n \n The government could consider, however, investing in its own data centers and guarantee loans for building new US chip fabrication plants, he said. The White House has pushed tech giants to do just that to protect national security.\n <\/p>\n \n \u201cIf we screw up and can\u2019t fix it, we should fail, and other companies will continue on doing good work and servicing customers,\u201d Altman said. \u201cThat\u2019s how capitalism works and the ecosystem and economy would be fine.\u201d\n <\/p>\n