OpenAI Asks US to Expand Chips Tax Credit to AI Data Centers

(Bloomberg) — OpenAI has asked the Trump administration to revamp a Chips Act tax credit to help lower the cost of artificial intelligence infrastructure, as the startup explores additional ways the US government can support an industrywide data center build-out for AI.

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In a letter last week to White House Office of Science and Technology Policy Director Michael Kratsios, OpenAI Chief Global Affairs Officer Chris Lehane suggests the administration work with Congress to expand a 35% chips-focused tax credit to AI data centers, AI server producers and electrical grid components, such as transformers and the specialized steel used to produce them. The letter is dated Oct. 27, according to a copy posted online by the company.

Broadening the tax credit will “lower the effective cost of capital, de-risk early investment and unlock private capital to help alleviate bottlenecks and accelerate the AI build in the US,” Lehane said in the letter.

The letter, which has not been widely covered, offers added clarity into the role OpenAI thinks government should play to help offset the risk from costly investments in AI. OpenAI alone has committed to spending $1.4 trillion on data centers and chips to build more advanced AI systems and support wider adoption of the technology. Those spending plans have drawn scrutiny as the unprofitable startup pursues creative financing arrangements to support it, including deals that have been criticized for being circular.

Earlier this week, OpenAI Chief Financial Officer Sarah Friar alarmed some industry watchers by hinting at a role for the US government to “backstop the guarantee that allows the financing to happen.” Soon after, Friar and OpenAI’s Sam Altman took pains to clarify her remarks, stressing that she had misspoken and that the ChatGPT maker was not seeking a bailout for its infrastructure commitments.

The Trump administration has dismissed the idea of a financial backstop for AI companies, according to US officials, after Friar’s remarks raised questions about the prospect for a bailout. White House AI and crypto czar David Sacks also posted Thursday: “There will be no federal bailout for AI.”

Altman, in a social post Friday, said an effort to revitalize the US chip industry “across the entire stack — fabs, turbines, transformers, steel, and much more — will help everyone in our industry, and other industries (including us).”

“To the degree the government wants to do something to help ensure a domestic supply chain, great.” Altman wrote. “But that’s super different than loan guarantees to OpenAI, and we hope that’s clear.”

A representative for the White House Office of Science and Technology Policy didn’t respond to a request for comment.

In its letter, OpenAI also advocated for the government to issue grants, cost-sharing agreements, loans, or loan guarantees to “manufacturers” in the AI industry broadly, without specifying exactly which kinds of companies.

OpenAI said this type of financial support would help counter China in instances where it is “distorting the market,” such as copper, aluminum and electrical steel. Direct funding would also help shorten lead times for critical grid components such as transformers, the letter said.

In a separate September white paper on infrastructure policy, OpenAI also said it supports loan guarantees to allow AI companies to “confidently purchase US-made chips at scale.” The move would shore up demand for US semiconductor facilities while reducing costs for AI companies purchasing chips, the white paper said.

The US has a prototype for loans and loan guarantees for strategic industries, as it offered these incentives to the semiconductor industry as part of the Chips Act. As of the end of January this year, only $5.5 billion of up to $75 billion were awarded, per a Commerce Department report.

OpenAI’s requested tax credit aligns with the Trump administration’s consistent messaging about winning the AI race and its high-level determination to remake the Chips Act of 2022. Earlier this year, it converted a Chips Act grant in Intel Corp. into an equity stake, marking a significant departure from the original plan.

The so-called Advanced Manufacturing Investment Credit named in the letter was initially part of the 2022 Chips Act. It was increased to 35% from 25% as part of the omnibus tax bill Congress passed this July.

(Updates with comments from OpenAI’s Altman beginning in the seventh paragraph.)

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