Former OpenAI researcher and hedge fund “Situational Awareness” founder Leopold Aschenbrenner. Captured from Aschenbrenner’s X
Situational Awareness, an artificial intelligence-focused hedge fund that recently sold most of its stock portfolio to major hedge fund Citadel after suffering large investment losses, is drawing attention by investing more than 700 billion won in a semiconductor manufacturing equipment startup. Foreign media assessed the move as showing that “despite last month’s crisis, the conviction of Situational founder Leopold Aschenbrenner in AI infrastructure remains unchanged,” and that “it suggests his investment focus has shifted from leveraged bets in public markets to private investments targeting bottlenecks in the AI supply chain.”
On the 8th, The Wall Street Journal (WSJ) reported, citing people familiar with the matter, that Situational recently invested $400 million (about 560 billion won) in semiconductor manufacturing equipment startup Sourcefoundry. Including its previous investment, the total amount reaches $500 million.
Sourcefoundry, founded last year by Abdulmalik Obaid and Joe Berg, both holders of doctorates in materials science and engineering from Stanford University, aims to develop cheaper, faster-to-produce equipment and software for manufacturing AI chips in a semiconductor equipment market dominated by the Netherlands’ ASML. ASML is the only company that produces extreme ultraviolet (EUV) lithography equipment, which is essential for producing cutting-edge AI chips. However, ASML’s EUV lithography machines are the size of a school bus, take a very long time to manufacture and install, and are known to cost more than $400 million per unit. Still, as the company was founded only a year ago and is running its business secretively, detailed information on what technology Sourcefoundry holds and how it differs from ASML’s approach has not been disclosed. Nonetheless, Sourcefoundry has raised at least several hundred million dollars to date, including a recent funding round conducted at a valuation of $5 billion (about 7 trillion won), one person said.
Stephanie Zhan, a partner at Sequoia and an early investor in Sourcefoundry, explained that “the AI supply chain grows more bottlenecked the further you trace it back, from models to semiconductors and to the equipment that manufactures them,” and that “Sourcefoundry seeks to resolve the tightest bottleneck of semiconductor manufacturing equipment, starting with the lithography process.” In the United States, which is pursuing self-sufficiency in the semiconductor supply chain, numerous startups besides Sourcefoundry — including Substrate, xLight, and Inversion Semiconductor — are challenging the advanced semiconductor equipment market.
AI Hedge Fund Founded by Twentysomething With No Investment Experience… Changing Investment Strategy?
Situational Awareness founder Leopold Aschenbrenner. Captured from Aschenbrenner’s web blog. Yonhap News
Situational, founded by Leopold Aschenbrenner, a twentysomething former OpenAI researcher with no investment experience whatsoever, posted a cumulative return of 439% in the first half of this year. His investment strategy drew extraordinary attention on Wall Street, and some praised him as “the Nostradamus (prophet) of the AI industry.” But as tech stocks recently plunged, he came under pressure from massive borrowings. In response, Situational held an emergency meeting on the 29th of last month and sold most of its public stock portfolio, worth about $16 billion, to Citadel in just a single day. The deal is regarded as one of the largest emergency stock transactions in Wall Street history.
Foreign media assessed that investing in a semiconductor equipment startup under such circumstances shows that Situational still holds conviction in AI infrastructure and that his investment focus has shifted to private investments. The WSJ reported that Situational told investors it would invest up to 30% of its portfolio in private companies. It further assessed that “Situational has built an unusual investment strategy spanning from early-stage startups to public stocks,” analyzing that “even when it sold most of its portfolio of large-cap public stocks — including SK hynix, SanDisk, and Bloom Energy — to Citadel last month, it kept intact its equity portfolio of private companies such as Anthropic and Fluidstack.”