Cerebras Systems Receives CFIUS Approval for Collaboration with UAE’s Group 42

Toronto, Canada – At the Collision conference on June 20, 2024, Andrew Feldman, co-founder and CEO of Cerebras Systems, announced a significant milestone for his company. Cerebras, an innovative developer of AI chips, has received clearance from the Committee on Foreign Investment in the United States (CFIUS) to sell shares to the United Arab Emirates-based AI firm, Group 42. This partnership, backed by Microsoft, represents a key step towards Cerebras’ ambition of going public.

Cerebras competes in the dynamic AI hardware market, predominantly against giants like Nvidia, whose graphics processing units (GPUs) have become the standard for AI model training and deployment. Interestingly, a remarkable 87% of Cerebras’ revenue in the first half of 2024 came from Group 42, raising questions about potential regulatory hurdles related to this collaboration. The uncertainty surrounding the company’s IPO was primarily linked to its relationship with Group 42, compelling them to address these regulatory concerns with CFIUS promptly.

In a message on LinkedIn, Feldman expressed gratitude to President Biden and acknowledged the partnership between Cerebras and Group 42, highlighting the importance of collaboration in advancing AI technology. He thanked both nations for their commitment to fostering innovation within the U.S., particularly emphasizing that the UAE leadership plays a vital role in supporting American AI ventures.

Concerns about Group 42’s links to China have previously prompted scrutiny from U.S. lawmakers. Last year, Congressman Mike Gallagher, a Republican from Wisconsin, stated his relief at G42 working to minimize its Chinese investments. Notably, Microsoft’s massive $1.5 billion investment in Group 42 further substantiates its importance in the AI sector.

Both Cerebras and Group 42 had voluntarily informed CFIUS about their plans to sell voting shares, as outlined in Cerebras’ IPO prospectus. Initially, Group 42 intended to acquire $335 million worth of Cerebras shares by mid-April. However, they later amended the agreement to focus on non-voting shares, prompting a withdrawal of their initial notice to CFIUS, based on a belief that CFIUS may not hold jurisdiction over non-voting securities.

While feedback from CFIUS remains pending, the tech ecosystem continues to navigate a shifting landscape following higher interest rates, which have discouraged investments in unprofitable companies. Recent months have seen a resurgence in IPO activity, with Cerebras and other tech firms inching closer to public offerings. In a similar vein, CoreWeave, an AI infrastructure provider, recently entered the public market but faced a 7% drop in shares on its second day of trading.

The path forward for Cerebras appears promising, yet cautious. As the company gears up for its IPO—though details on timing and size remain scarce—the proactive steps taken to secure CFIUS approval signal a commitment to transparency and regulatory compliance.

In conclusion, Cerebras Systems’ journey underscores the complexities of international partnerships in the fast-evolving AI landscape. The AI Buzz Hub team is excited to see where these breakthroughs take us. Want to stay in the loop on all things AI? Subscribe to our newsletter or share this article with your fellow enthusiasts.