I want the United States to lead the race in artificial intelligence as much as the next guy. And I recognize that there is a massive national security component to this technological race. As Frederick Kempe at the Atlantic Council wrote this week, “To win this race, governments know they must work effectively with private companies such as Anthropic, Google, Nvidia, Microsoft, and OpenAI in the United States and Alibaba, DJI, High-Flyer, and Huawei in China. Such companies wield budgets and global reach that would make most defense ministries blush.”
Those are all big American tech companies, but OpenAI stands out, as artificial general intelligence is its primary mission, as well has for having a hybrid company structure comprising a nonprofit foundation and a for-profit public benefit corporation.
OpenAI is estimated to be worth $500 billion.
A week ago, OpenAI chief financial officer Sarah Friar spoke at the Wall Street Journal’s Tech Live conference and mentioned the possibility of the federal government playing a role in ensuring that the company has sufficient financing to purchase enough state-of-the-art chips. Pardon the long transcription of her comments, but I want to dispel any “taken out of context” complaints.
Friar: We, at OpenAI, at our core, are the model company that needs always to be the state of the art…
And in order to do that, we always want to be on the frontier chip. So, the question is, how long does a chip remain on the frontier? Is it three years, four years, five years, or even longer? Now, in a world where we have no compute, we’re compute constrained, we are absolutely using chips that are like A100 equivalents that have been around maybe six, seven years at this point in time? If that’s the case, financing chips gets a lot easier. If the timeline on the chips stays short, that gets harder. And so, this is where we’re looking for an ecosystem of banks, private equity, maybe even governmental, like the ways governments can come to bear.
Wall Street Journal tech and media editor Sarah Krouse: Meaning like a federal subsidy or –
Friar: Meaning like, just, first of all, the backstop, the guarantee that allows the financing to happen, that can really drop the cost of the financing, but also increase the loan to value. So, the amount of debt that you can take on top of an equity portion for some—
Krouse: So some federal backstop for chip investment.
Friar: Exactly, and I think we’re seeing that. I think the US government in particular has been incredibly forward-leaning, has really understood that AI is almost a national strategic asset, and that we really need to be thoughtful when we think about competitive competition with, for example, China. Are we doing all the right things to grow our AI ecosystem as fast as possible?
Krouse: Are you talking to the White House about how to further formalize that kind of backstop?
Friar: We’re always being brought in by the White House to give our point of view as an expert on what’s happening in the sector, for sure.
Krouse: Mm-hmm, is there something in the works that’s tangible, sort of?
Friar: Nothing, no, no. I love you, Sarah, but nothing to announce. Nothing that’s going on right now.
Shortly thereafter, Friar issued a statement declaring that when she said OpenAI was looking for “some federal backstop for chip investment,” she did not mean that OpenAI was “seeking a government backstop for our infrastructure commitments.”
OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word “backstop” and it muddied the point. As the full clip of my answer shows, I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part.
And OpenAI CEO Sam Altman said that “OpenAI has spoken with the U.S. government about the possibility of federal loan guarantees to spur construction of chip factories in the U.S., but has not sought U.S. government guarantees for building its data centers.”
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. If one company fails, other companies will do good work. What we do think might make sense is governments building (and owning) their own AI infrastructure, but then the upside of that should flow to the government as well.
OpenAI is worth something in the neighborhood of $500 billion. They reportedly had $4.3 billion in revenue in the first half of 2025, and $17.5 billion in cash and securities at the end of June.
Why is there even the slightest murmur about the federal government offering a backstop for loans, owning AI infrastructure, or offering some other form of financial support?
If you thought people hated the taxpayer bailout of Wall Street back at the start of the Great Recession, how do you think people are going to feel about financial assistance from the federal government — in any form — to one of the biggest companies riding the AI boom?
By National Review – https://www.nationalreview.com/corner/no-were-not-going-to-use-taxpayer-money-to-backstop-openai/
