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On Wed, 9 Oct, 12:05 AM UTC
3 Sources
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Cerebras may postpone IPO as US government investigates potential AI tech transfer to China
Reuters reports that Cerebras is expected to delay its planned IPO due to complications with a U.S. government review of a minority investment from the UAE-based company G42. The review, conducted by the Committee on Foreign Investment in the United States (CFIUS), is focused on potential national security risks associated with G42's involvement. The CFIUS is investigating the stake the UAE-based Group 42 plans to take in Cerebras, assessing whether the UAE-based investment could pose national security concerns. G42 is committed to buying $335 million worth of Cerebras shares, giving it a stake exceeding 5%. The investment plan sparked the U.S. investigation due to fears of G42's potential role in funneling AI technology to regions restricted by U.S. export laws, particularly China. G42 is Cerebras's primary customer, and sales to the UAE-based company accounted for 83% of the AI company's revenue in 2023. Cerebras has been collaborating with G42 to train a large Arabic language model, now available through Microsoft Azure. Also, Group 42 currently holds less than 5% of Cerebras's Class A shares but may buy more based on the volume of its future purchases from Cerebras, the companies said earlier this month. Cerebras hopes to receive clearance for an IPO from CFIUS by the end of this year, but the timing remains uncertain. According to Reuters, the company had scheduled its IPO roadshow for the upcoming weeks but is now likely to delay these plans. As the review process with CFIUS remains incomplete, it creates uncertainty around the company's timeline for going public. Going public would give Cerebras the necessary money to better compete against various rivals, including Nvidia, AMD, and Intel. While the company probably has enough finances for now, IPO delays could impact its ability to compete in the longer term as it needs to build new products. According to Reuters, Cerebras and G42 modified their CFIUS filing to streamline the review process, clarifying that G42's shares will be non-voting shares. The companies argued that this adjustment should exempt the transaction from a detailed CFIUS review. Despite this, the regulatory body is still evaluating the situation and has not yet approved it. The U.S. Treasury Department, which oversees CFIUS, has stated that it would continue to take necessary steps to protect national security interests but has not commented on the specifics of the Cerebras case.
[2]
Exclusive-Cerebras Likely to Postpone IPO Due to CFIUS Review Delay on G42 Deal, Sources Say
NEW YORK (Reuters) - Cerebras Systems is likely to postpone its IPO, after facing delays with a U.S. national security review on UAE-based tech conglomerate G42's minority investment in the AI chipmaker, people familiar with the matter said on Tuesday. Cerebras, which competes with industry leader Nvidia in the lucrative artificial intelligence chip market, is likely to call off the roadshow that was scheduled for early next week for its highly anticipated initial public offering, the sources said, requesting anonymity as the discussions are confidential. Cerebras declined to comment. G42 did not immediately respond to requests for comment. The Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments over possible national security concerns, is currently looking into G42's investment in Cerebras, the company disclosed in a recent regulatory filing. Cerebras still expects CFIUS to green-light the G42 deal this year, the sources said. The company will look to proceed with a stock market launch as soon as it receives the necessary clearance from CFIUS, the sources said, cautioning that the plans could change depending on the timing of the approval. A spokesperson for the U.S. Treasury, which is in charge of CFIUS, declined to comment on the Cerebras IPO, saying that the agency is "committed to taking all necessary actions within its authority to safeguard U.S. national security." (Reporting by Echo Wang in New York, Max Cherney and Krystal Hu in San Francisco; additional reporting by Alexandra Alper; Editing by Anirban Sen)
[3]
Exclusive: Cerebras likely to postpone IPO due to CFIUS review delay on G42 deal, sources say
NEW YORK, Oct 8 (Reuters) - Cerebras Systems is likely to postpone its IPO, after facing delays with a U.S. national security review on UAE-based tech conglomerate G42's minority investment in the AI chipmaker, people familiar with the matter said on Tuesday. Cerebras, which competes with industry leader Nvidia (NVDA.O), opens new tab in the lucrative artificial intelligence chip market, is likely to call off the roadshow that was scheduled for early next week for its highly anticipated initial public offering, the sources said, requesting anonymity as the discussions are confidential. Advertisement · Scroll to continue Cerebras declined to comment. G42 did not immediately respond to requests for comment. The Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments over possible national security concerns, is currently looking into G42's investment in Cerebras, the company disclosed in a recent regulatory filing. Cerebras still expects CFIUS to green-light the G42 deal this year, the sources said. The company will look to proceed with a stock market launch as soon as it receives the necessary clearance from CFIUS, the sources said, cautioning that the plans could change depending on the timing of the approval. Advertisement · Scroll to continue A spokesperson for the U.S. Treasury, which is in charge of CFIUS, declined to comment on the Cerebras IPO, saying that the agency is "committed to taking all necessary actions within its authority to safeguard U.S. national security." Reporting by Echo Wang in New York, Max Cherney and Krystal Hu in San Francisco; additional reporting by Alexandra Alper; Editing by Anirban Sen Our Standards: The Thomson Reuters Trust Principles., opens new tab Echo Wang Thomson Reuters Echo Wang is a correspondent at Reuters covering U.S. equity capital markets, and the intersection of Chinese business in the U.S, breaking news from U.S. crackdown on TikTok and Grindr, to restrictions Chinese companies face in listing in New York. She was the Reuters' Reporter of the Year in 2020. Krystal Hu Thomson Reuters Krystal reports on venture capital and startups for Reuters. She covers Silicon Valley and beyond through the lens of money and characters, with a focus on growth-stage startups, tech investments and AI. She has previously covered M&A for Reuters, breaking stories on Trump's SPAC and Elon Musk's Twitter financing. Previously, she reported on Amazon for Yahoo Finance, and her investigation of the company's retail practice was cited by lawmakers in Congress. Krystal started a career in journalism by writing about tech and politics in China. She has a master's degree from New York University, and enjoys a scoop of Matcha ice cream as much as getting a scoop at work.
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Cerebras Systems, an AI chipmaker, is expected to postpone its IPO due to an ongoing US national security review of a minority investment from UAE-based G42, raising concerns about potential AI technology transfer to China.
Cerebras Systems, a prominent AI chipmaker competing with industry leader Nvidia, is likely to postpone its highly anticipated Initial Public Offering (IPO) due to complications arising from a U.S. government review. The delay stems from an investigation by the Committee on Foreign Investment in the United States (CFIUS) into a minority investment from UAE-based tech conglomerate G42 12.
The CFIUS is scrutinizing G42's planned stake in Cerebras, which exceeds 5% and is valued at $335 million. The review focuses on potential national security risks, particularly the possibility of AI technology being transferred to regions restricted by U.S. export laws, such as China 1. This investigation has created uncertainty around Cerebras' timeline for going public, with the company now likely to call off its IPO roadshow scheduled for early next week 2.
G42 plays a crucial role in Cerebras' business operations:
In an attempt to expedite the review process, Cerebras and G42 have modified their CFIUS filing:
Despite these efforts, CFIUS continues to evaluate the situation without approval 1.
The delay in the IPO process could have significant implications for Cerebras:
The U.S. Treasury Department, overseeing CFIUS, has stated its commitment to safeguarding national security interests but has not commented specifically on the Cerebras case 13.
This situation highlights the increasing scrutiny of foreign investments in U.S. technology companies, especially in sensitive areas like artificial intelligence, as governments worldwide grapple with the strategic implications of AI advancements.
Reference
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U.S. News & World Report
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