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Toronto, Canada – June 20, 2024; Andrew Feldman, co-founder and CEO of Cerebras Systems, addressed attendees at the Collision conference held in Toronto.
Artificial intelligence chip manufacturer Cerebras Systems announced on Monday that it has received approval from a U.S. regulatory body to sell shares to Group 42, an AI firm backed by Microsoft and based in the United Arab Emirates.
This approval was granted by the Committee on Foreign Investment in the United States (CFIUS), marking a crucial development for Cerebras as it moves forward with plans to go public. Cerebras is in competition with Nvidia, which dominates the market with its graphics processing units favored for training and deploying AI models. Notably, a significant portion of Cerebras’ revenue is derived from its partnership with Group 42.
The company filed for an initial public offering (IPO) in September but has yet to disclose specifics regarding the timing or the expected scale of the offering. Concerns regarding regulatory scrutiny related to its ties with Group 42—a source of 87% of Cerebras’ revenue in the first half of 2024—had led to uncertainties surrounding the IPO.
In a recent LinkedIn post, Andrew Feldman expressed gratitude for the supportive investment climate in the U.S., stating, “We thank @POTUS for making America the best place in the world to invest in cutting-edge #AI technology.” He also acknowledged the leadership of Group 42 and the UAE for their ongoing collaboration with U.S.-based AI firms.
Concerns have previously been raised by lawmakers about Group 42’s connections to China. Last year, Mike Gallagher, a Republican congressman from Wisconsin, commented on the company’s efforts to reduce its investments in Chinese firms, expressing approval over the reduction. Additionally, Microsoft has made headlines with a significant $1.5 billion investment in Group 42 to bolster AI development and expand its reach globally.
Cerebras and Group 42 had submitted voluntary notices to CFIUS regarding the proposed sale of voting shares, as noted in Cerebras’ IPO prospectus. Group 42 was slated to purchase $335 million worth of Cerebras shares by mid-April. However, the terms were later altered to involve non-voting shares, prompting the companies to withdraw their initial notice, asserting that CFIUS may not have authority over transactions of this nature.
CFIUS has not provided any immediate comments regarding the approval.
The market for technology IPOs has been relatively sluggish since 2021 due to increased interest rates, which have made it challenging for unprofitable companies to attract investors. Recently, some technology firms, including Cerebras, have started to make moves toward IPOs, with AI infrastructure provider CoreWeave successfully going public just last week.
CoreWeave’s shares experienced a 7% decline on Monday, marking a rough second day for the company on the market.
WATCH: Cerebras Systems may delay its IPO following ongoing CFIUS review delays, reports suggest.
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