OpenAI's Altman and Friar walk back remarks about federal loan guarantees
(2025/11/06)
- Reference: 1762458180
- News link: https://www.theregister.co.uk/2025/11/06/openai_cfo_walks_back_remarks/
- Source link:
updated After this story was published, OpenAI CEO Sam Altman took a turn at damage control, following remarks from CFO Sarah Friar suggesting that the company was seeking federal loan guarantees – lanugage she later walked back.
In a lengthy [1]statement Altman echoed the remarks of venture capitalist and Trump advisor David Sacks, who'd said there'd be no government bailout. Altman stated, “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.”
Yet just two paragraphs later, he added a caveat: "The one area where we have discussed loan guarantees is as part of supporting the buildout of semiconductor fabs in the US, where we and other companies have responded to the government's call and where we would be happy to help (though we did not formally apply)."
[2]
This would be, he insisted, to secure the silicon supply chain and not to have the feds back private data centers.
[3]
[4]
He then went on to dress up the elephant in the room, OpenAI's $1.4 trillion in commitments over the next eight years, which is a lot of money when you showed a net loss of more than $11.5 billion last quarter.
"Obviously this requires continued revenue growth, and each doubling is a lot of work!" he wrote, using only one exclamation mark to make a point that deserves a few more.
[5]
OpenAI CFO Sarah Friar had previously said the company was not seeking federal loan guarantees after suggesting the opposite in an on-stage interview at a Wall Street Journal event.
Speaking at the WSJ's Tech Live event in Napa, California, on Wednesday, the former DoorDash CEO was discussing the challenge of financing the training of leading AI models on the best available chips, which becomes more difficult if they have to replace cutting-edge silicon with new SKUs every few years.
"If the timeline on the chip stays short, that gets harder," said Friar. "And so this is where we're looking for an ecosystem of banks, private equity, maybe even ... the ways governments can come to bear."
[6]
"Meaning like a federal subsidy or something?" asked WSJ tech and media editor Sarah Krouse.
Friar replied, "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 ... "
"Some federal backstop for chip investors," Krouse interjected.
"Exactly," said Friar.
Well, not exactly.
Following the publication of the interview and social media scolding, Friar offered a different interpretation of her words.
"I want to clarify my comments earlier today," said Friar in a LinkedIn [7]post on Wednesday evening. "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. As I said, the US government has been incredibly forward-leaning and has really understood that AI is a national strategic asset."
[8]Agents of misfortune: The world isn't ready for autonomous software
[9]Microsoft: Don't let AI agents near your credit card yet
[10]Microsoft apologizes for not explaining cheaper no-AI M365 plans, and all it took was a government lawsuit
[11]Attackers abuse Gemini AI to develop 'Thinking Robot' malware and data processing agent for spying purposes
The Mercatus Center, a free-market think tank affiliated with George Mason University, illustrates the problem with federal funding intervention by citing the 2009 bankruptcy of energy firm Solyndra following $535 in government loan guarantees.
"With a loan guarantee, the government agrees to pay a private lender for some portion or even all of the loan in the event that the borrower is unable to pay it back," [12]wrote Matthew D. Mitchell and Tad DeHaven, in 2018. "When that happens, it is effectively a bailout for the lender. This makes a loan guarantee a privilege twofer: the borrowing firm obtains credit that it otherwise would not be able to (or at least not at such favorable terms), while the lender gets to offload some or all of the risk onto taxpayers."
Friar's remarks evidently hit a nerve among onlookers growing nervous about [13]an AI bubble and the possibility of further alienating a public already fretting over [14]AI-leavened energy bills .
In a Thursday [15]post on X, David Sacks, an entrepreneur and Chair of the President's Council of Advisors on Science and Technology, said, "There will be no federal bailout for AI. The US has at least five major frontier model companies. If one fails, others will take its place."
Sacks acknowledged that the administration does want to make permitting and power generation easier to facilitate the rapid buildout of data center infrastructure without increasing residential electricity rates – which are up 5.1 percent in the past year, [16]according to the Bureau of Labor Statistics .
"Finally, to give benefit of the doubt, I don't think anyone was actually asking for a bailout," he continued. "(That would be ridiculous.) But company executives can clarify their own comments."
Friar also [17]said that OpenAI isn't planning to pursue an initial public offering soon, meaning that the cash burning biz will continue to dine out on the forbearance of investors. The company had [18]a net loss of at least $11.5 billion during the quarter that ended September 30, based on financial statements from Microsoft, which owns a portion of the AI peddler. ®
Updated at 2100 GMT on Nov 6 to add Altman's response
Get our [19]Tech Resources
[1] https://x.com/sama/status/1986514377470845007
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aQ0oeKnkjdKtgQOODnRHfgAAAU8&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[7] https://www.linkedin.com/posts/sarah-friar_openai-wants-federal-backstop-for-new-investments-activity-7392049356012507136-wAV7?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAAEUrwBGDapdyAWPL2MZIjljoJFUQRWVlo
[8] https://www.theregister.com/2025/11/06/agents_of_misfortune_the_world/
[9] https://www.theregister.com/2025/11/06/microsoft_unveils_the_magentic_marketplace/
[10] https://www.theregister.com/2025/11/06/microsoft_copilot_m365_apology/
[11] https://www.theregister.com/2025/11/05/attackers_experiment_with_gemini_ai/
[12] https://www.mercatus.org/economic-insights/expert-commentary/government-privilege-loan-guarantees
[13] https://www.wsj.com/livecoverage/stock-market-today-dow-sp-500-nasdaq-11-04-2025/card/michael-burry-is-back-with-two-big-shorts-palantir-and-nvidia-zQA6SOnar36KPg0BtGQS
[14] https://www.npr.org/2025/11/06/nx-s1-5597971/electricity-bills-utilities-ai
[15] https://x.com/DavidSacks/status/1986476840207122440
[16] https://www.bls.gov/news.release/cpi.htm
[17] https://www.reuters.com/business/openai-is-not-working-an-ipo-wsj-reports-2025-11-05/
[18] https://www.theregister.com/2025/10/29/microsoft_earnings_q1_26_openai_loss/
[19] https://whitepapers.theregister.com/
In a lengthy [1]statement Altman echoed the remarks of venture capitalist and Trump advisor David Sacks, who'd said there'd be no government bailout. Altman stated, “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.”
Yet just two paragraphs later, he added a caveat: "The one area where we have discussed loan guarantees is as part of supporting the buildout of semiconductor fabs in the US, where we and other companies have responded to the government's call and where we would be happy to help (though we did not formally apply)."
[2]
This would be, he insisted, to secure the silicon supply chain and not to have the feds back private data centers.
[3]
[4]
He then went on to dress up the elephant in the room, OpenAI's $1.4 trillion in commitments over the next eight years, which is a lot of money when you showed a net loss of more than $11.5 billion last quarter.
"Obviously this requires continued revenue growth, and each doubling is a lot of work!" he wrote, using only one exclamation mark to make a point that deserves a few more.
[5]
OpenAI CFO Sarah Friar had previously said the company was not seeking federal loan guarantees after suggesting the opposite in an on-stage interview at a Wall Street Journal event.
Speaking at the WSJ's Tech Live event in Napa, California, on Wednesday, the former DoorDash CEO was discussing the challenge of financing the training of leading AI models on the best available chips, which becomes more difficult if they have to replace cutting-edge silicon with new SKUs every few years.
"If the timeline on the chip stays short, that gets harder," said Friar. "And so this is where we're looking for an ecosystem of banks, private equity, maybe even ... the ways governments can come to bear."
[6]
"Meaning like a federal subsidy or something?" asked WSJ tech and media editor Sarah Krouse.
Friar replied, "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 ... "
"Some federal backstop for chip investors," Krouse interjected.
"Exactly," said Friar.
Well, not exactly.
Following the publication of the interview and social media scolding, Friar offered a different interpretation of her words.
"I want to clarify my comments earlier today," said Friar in a LinkedIn [7]post on Wednesday evening. "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. As I said, the US government has been incredibly forward-leaning and has really understood that AI is a national strategic asset."
[8]Agents of misfortune: The world isn't ready for autonomous software
[9]Microsoft: Don't let AI agents near your credit card yet
[10]Microsoft apologizes for not explaining cheaper no-AI M365 plans, and all it took was a government lawsuit
[11]Attackers abuse Gemini AI to develop 'Thinking Robot' malware and data processing agent for spying purposes
The Mercatus Center, a free-market think tank affiliated with George Mason University, illustrates the problem with federal funding intervention by citing the 2009 bankruptcy of energy firm Solyndra following $535 in government loan guarantees.
"With a loan guarantee, the government agrees to pay a private lender for some portion or even all of the loan in the event that the borrower is unable to pay it back," [12]wrote Matthew D. Mitchell and Tad DeHaven, in 2018. "When that happens, it is effectively a bailout for the lender. This makes a loan guarantee a privilege twofer: the borrowing firm obtains credit that it otherwise would not be able to (or at least not at such favorable terms), while the lender gets to offload some or all of the risk onto taxpayers."
Friar's remarks evidently hit a nerve among onlookers growing nervous about [13]an AI bubble and the possibility of further alienating a public already fretting over [14]AI-leavened energy bills .
In a Thursday [15]post on X, David Sacks, an entrepreneur and Chair of the President's Council of Advisors on Science and Technology, said, "There will be no federal bailout for AI. The US has at least five major frontier model companies. If one fails, others will take its place."
Sacks acknowledged that the administration does want to make permitting and power generation easier to facilitate the rapid buildout of data center infrastructure without increasing residential electricity rates – which are up 5.1 percent in the past year, [16]according to the Bureau of Labor Statistics .
"Finally, to give benefit of the doubt, I don't think anyone was actually asking for a bailout," he continued. "(That would be ridiculous.) But company executives can clarify their own comments."
Friar also [17]said that OpenAI isn't planning to pursue an initial public offering soon, meaning that the cash burning biz will continue to dine out on the forbearance of investors. The company had [18]a net loss of at least $11.5 billion during the quarter that ended September 30, based on financial statements from Microsoft, which owns a portion of the AI peddler. ®
Updated at 2100 GMT on Nov 6 to add Altman's response
Get our [19]Tech Resources
[1] https://x.com/sama/status/1986514377470845007
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aQ0oeKnkjdKtgQOODnRHfgAAAU8&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[7] https://www.linkedin.com/posts/sarah-friar_openai-wants-federal-backstop-for-new-investments-activity-7392049356012507136-wAV7?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAAEUrwBGDapdyAWPL2MZIjljoJFUQRWVlo
[8] https://www.theregister.com/2025/11/06/agents_of_misfortune_the_world/
[9] https://www.theregister.com/2025/11/06/microsoft_unveils_the_magentic_marketplace/
[10] https://www.theregister.com/2025/11/06/microsoft_copilot_m365_apology/
[11] https://www.theregister.com/2025/11/05/attackers_experiment_with_gemini_ai/
[12] https://www.mercatus.org/economic-insights/expert-commentary/government-privilege-loan-guarantees
[13] https://www.wsj.com/livecoverage/stock-market-today-dow-sp-500-nasdaq-11-04-2025/card/michael-burry-is-back-with-two-big-shorts-palantir-and-nvidia-zQA6SOnar36KPg0BtGQS
[14] https://www.npr.org/2025/11/06/nx-s1-5597971/electricity-bills-utilities-ai
[15] https://x.com/DavidSacks/status/1986476840207122440
[16] https://www.bls.gov/news.release/cpi.htm
[17] https://www.reuters.com/business/openai-is-not-working-an-ipo-wsj-reports-2025-11-05/
[18] https://www.theregister.com/2025/10/29/microsoft_earnings_q1_26_openai_loss/
[19] https://whitepapers.theregister.com/
What’s the money for
Grunchy
They already trained the A.I. so what’s the new money for?
Last time they did this they introduced “line of reasoning” where the LLM tries to figure out a way to explain where the answer comes from, which feature was kinda copied from DeepSeek LLM.
So, what’s the new innovation?
We already know the current technology can never be capable of A.G.I. so what’s the new money for - if anything.
Signed, Skeptical Cat
Re: What’s the money for
DS999
We already know the current technology can never be capable of A.G.I.
They still want to believe it. At least Zuck and Altman keep harping on that, and so long as that results in more money flowing in to their stocks that's a profitable position to take. Who knows whether they actually believe it not, or whether they don't but they fear "maybe someone else is closer than me" so they figure they better out-invest everyone else just in case!
1.4 trillion dollars
ecofeco
Rejoice poor people! Many of you may die from neglect, but that is a chance they are willing take!
Wow, this is going quick
We're already talking about bailing out OpenAI. I wasn't expecting that till next year.
Looking forward to reading what Ed Zitron and David Gerard have to say.