Cerebras will postpone its IPO: the US fears that China will gain access to AI superchips through the mediation of the UAE

AI superchip maker Cerebras Systems will likely be forced to delay its IPO due to delays in reviewing foreign investment in the company. According to Reuters, the UAE conglomerate G42 (Core42) was a minority investor, which attracted the attention of regulators. According to the publication’s sources, Cerebras, which is a young and promising competitor of NVIDIA, will probably cancel the presentation planned for early next week and preceding the IPO. Citigroup and Barclays have been selected as lead underwriters for the planned Cerebras IPO.

The G42’s investment in Cerebras is being reviewed by the Committee on Foreign Investment in the United States (CFIUS). It evaluates whether there are national security threats to foreign investment in American businesses. Cerebras expects CFIUS to greenlight the G42 investment before the end of 2024. The accelerator manufacturer will aim to go public as soon as it receives the necessary regulatory approvals, but the company’s plans may change. The US Treasury Department declined to comment on the IPO, but said that the regulator will take all measures to protect US national security within its competence.

The problem is that G42, which is Cerebras’ investor and largest client, has already attracted the attention of China crackdown advocates. It is believed that companies from the Middle East can be used by China to circumvent American sanctions limiting the export of semiconductors to the Middle Kingdom. In addition, the G42 has previously been caught doing business with Beijing.

Image source: Cerebras

According to available data, G42 purchases account for $65.1 million or 83% of Cerebras’ total revenue for the 2023 calendar year. In the first half of 2024, the company registered $136.4 million, while last year for the same period, revenue was $8.7 million. In other words, G42 is a key buyer of the company’s products. In addition, by April, G42 committed to buy back $335 million of Cerbras shares, bringing its stake to more than 5%. At first, Cerebras and G42 filed an application for the sale of shares with CFIUS, but later adjusted it by declaring that the shares being sold were non-voting, so their verification by the regulator was not needed. An application to withdraw the notice was filed in September.

Today, California-based Cerebras, valued at approximately $4 billion in 2021, is building a series of AI supercomputers for the G42, including in the United States. The technology developed by Cerebras has already been used to train a large language model (LLM) for Arabic. The accelerators developed by Cerebras compete with NVIDIA solutions. According to experts, the huge size AI chips offered by the startup have a number of advantages compared to NVIDIA accelerators and other solutions. It is noteworthy that Microsoft’s investment in G42 was approved after the latter, according to rumors, entered into a secret agreement with the US administration, which specifically stipulated interaction with China.