sam altman says he doesn’t want the government to bail out openai if it fails

OpenAI's Infrastructure Funding and Government Support

Executives at OpenAI are addressing inquiries regarding the financing of their substantial $1.4 trillion investment in data center infrastructure and operational commitments. Despite a rapidly increasing revenue stream, currently at an annual run rate of $20 billion, the scale of the investment presents a significant financial challenge, as CEO Sam Altman noted on X (formerly Twitter) on Thursday.

Initial Proposal for Government Backing

Altman’s statements followed comments made by OpenAI CFO Sarah Friar during a Wall Street Journal event. Friar initially suggested the U.S. government should provide a “backstop” for the company’s infrastructure loans.

A government backstop involves a guarantee that taxpayers would cover losses if the company were to default on its loans. This type of guarantee typically results in more favorable loan terms from lenders due to the reduced risk.

Balancing Chip Technology and Affordability

Friar explained that utilizing older chip technology can make financing more manageable for OpenAI, which faces computational constraints. However, the company’s primary objective remains deploying its advanced models on the most current and powerful chip technology available.

To facilitate this ongoing cycle of chip upgrades, she indicated the company was seeking support from a broad “ecosystem” encompassing banks, private equity firms, and potentially, government assistance.

Details of the Proposed Government Role

When questioned about the specific form of government involvement, Friar referenced a guarantee that would “drop the cost of the financing” and “increase the loan-to-value,” allowing for a greater amount of debt relative to equity investment.

She also suggested that discussions with the U.S. government regarding such support were already underway, highlighting the government’s recognition of AI as a crucial national strategic asset.

Retraction and Clarification

Following publication of her comments by The Wall Street Journal and subsequent criticism on X, Friar swiftly clarified her position on LinkedIn.

“I want to clarify my comments earlier today. OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word ‘backstop’ and it muddied the point,” she stated.

Reactions from Industry and Government Advisors

David Sacks, AI advisor to Donald Trump, responded on X, asserting that the U.S. government has no intention of bailing out any AI company.

Sacks emphasized the presence of multiple leading frontier model companies in the U.S., suggesting that the failure of one would not impede overall progress. He indicated the government’s focus is on streamlining permitting processes and enhancing power generation capabilities.

Altman's Response and Future Outlook

Following Sacks’ statement, Altman addressed the issue in a detailed post on X, echoing Sacks’ sentiments.

“We do not have or want government guarantees for OpenAI datacenters. We 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,” Altman wrote.

He clarified that discussions regarding loan guarantees had occurred, but specifically related to supporting the expansion of semiconductor fabrication facilities (fabs) within the U.S., a project to which OpenAI and other companies have expressed interest.

Acknowledging the Challenge and Future Revenue Projections

While acknowledging the validity of Friar’s initial proposal – that a government guarantee would simplify financing – Altman and OpenAI now face continued scrutiny regarding their funding strategy.

Altman projects the company will exceed $20 billion in annualized revenue by the end of the current year, with expectations for growth to hundreds of billions by 2030. He highlighted the company’s confidence in its “prospects,” particularly within its enterprise offerings, new consumer devices, and robotics initiatives.

The company anticipates approximately $1.4 trillion in commitments over the next eight years.