Trillion-dollar tax reduction game: OpenAI writes to the US government, seeking to expand the scope of chip tax incentives to AI infrastructure.

OpenAI has requested the Trump administration to reform the "Chip Act" tax credit policy in order to help reduce the cost of artificial intelligence infrastructure, as the startup is exploring ways in which the US government can support industry-specific AI data center construction. In a letter to Michael Kratsios, White House Chief Technology Officer, last week, OpenAI Chief Global Affairs Officer Chris Lattner suggested that the government collaborate with Congress to expand the current 35% chip-centered tax credit to include AI data centers, AI server manufacturers, and grid components such as transformers and special steels used in transformer production. According to a copy of the letter posted online by the company, the letter is dated October 27th. Lattner stated in the letter that expanding the tax credit would "reduce the actual cost of capital, remove risk for early investment, and unlock private capital to help alleviate bottlenecks and accelerate the construction of AI in the US." OpenAI also advocated for the government to provide funding, cost-sharing agreements, loans, or loan guarantees to a wide range of AI industry "manufacturers," but did not specify which types of companies. The company stated that such financial support would help counteract geopolitical risks, such as those in the areas of copper, aluminum, and electrical steel. Additionally, direct funding would help shorten delivery times for key grid components like transformers, the letter mentioned. Publicly available information shows that OpenAI also supports the loan guarantee mechanism mentioned in a September infrastructure policy whitepaper, believing that it would give AI companies more confidence to "purchase US chips in scale," boosting demand for semiconductor facilities and lowering the cost of purchasing chips. The US has a precedent of providing loans and loan guarantees to strategic industries - the Chip Act, in the past, has provided such incentives to the semiconductor industry. According to a report from the Department of Commerce, as of the end of January of this year, only $5.5 billion out of a total of up to $75 billion had been disbursed. OpenAI's request for tax credits aligns with the Trump administration's consistent stance on winning the AI race and their determination to reform the 2022 Chip Act. Earlier this year, the Trump administration redirected funding originally intended for Intel under the Chip Act to instead acquire shares in the company, diverging significantly from the original plan. The so-called "Advanced Manufacturing Investment Tax Credit" mentioned in the OpenAI letter was initially part of the 2022 Chip Act. As part of the tax legislation passed by Congress in July of this year, the credit rate was increased from 25% to 35%. The letter has not garnered widespread attention, but it provides more clarity on the role that OpenAI believes the government should play in mitigating the risks of expensive AI investments. OpenAI alone has committed $14 billion towards data centers and chips to build more advanced AI systems and support wider applications of the technology. As the unprofitable startup seeks creative financing arrangements to support this plan - including some criticized as "circular transactions" - these expenditure plans have come under scrutiny. OpenAI's CFO's "government guarantee" remarks have sparked controversy, with the Trump administration firmly rejecting the idea: there will be no AI bailout Earlier this week, OpenAI's Chief Financial Officer Sarah Frere hinted at the US government playing a role in providing a "backstop for financing," causing concern among some industry observers. It was clarified that providing a backstop for financing is not a simple "guarantee," but rather the government acting as the ultimate endorser, providing implicit credit support for OpenAI's substantial financing. This means that if OpenAI cannot pay back the money, the government would step in - essentially a government bailout. If a government guarantee is truly needed, it would mean using taxpayer money to foot the bill for a private AI company's gamble. This would set a dangerous precedent: tech giants too "big to fail." As a result, after concerns were raised about the prospects of a bailout following Frere's remarks, the Trump administration has rejected the idea of providing financial backing to AI companies. White House AI and cryptocurrency affairs head David Sachs also posted on social media on Thursday: "There will be no federal bailout for AI." Nevertheless, in a social media post on Friday, Oatman still stated that revitalizing the US chip industry "encompasses the entire supply chain - from factories, turbines, transformers, steel, and more - and this will benefit everyone in our industry, as well as other industries (including ours)." "If the government wants to take steps to help ensure domestic supply chains, that's fine," Oatman wrote. "But this is very different from providing loan guarantees to OpenAI, and we hope that this point is clear." Representatives from the White House Technology Policy Office did not respond to requests for comment.