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OpenAI is the artificial intelligence studio that took the world by storm with its chatbot ChatGPT, and it seems to be facing a financial crisis that could lead to its bankruptcy.
According to Analytics India Magazine, the company spends $700,000 every single day to run ChatGPT, which despite being their flag product has failed to generate enough for OpenAI to cover its costs. It also seems that its user base has been declining steadily over the last few months.
There also may be conflicts between CEO and co-founder Sam Altman and the rest of the company since Altman has been vocal about the possible dangers of AI when the company is focused on making profits and developing more advanced versions of GPT. Some tech experts have even speculated that Altman is having a “Frankenstein moment” and regrets creating something he can no longer control.
According to Interesting Engineering, one option for OpenAI is an IPO (Initial public offering), a good exit strategy for its current investors, but this also has several issues, one of which is staffing. It has been reported that the company has been struggling to retain and recruit talent. They are not firing people but they are losing employees as their staff keeps getting snatched by their competitors.
Another issue for the AI industry as a whole is the supply chain. There has been an ongoing shortage of enterprise-level GPUs due to AI models depending heavily on computing power, and the US-China Tech war is not helping either.
According to Interesting Engineering, Altman stated that the GPU shortage is stopping the company’s progress in improving and training new models. Nevertheless, the company’s recent application for a trademark on ‘GPT-5’ shows there are committed to ongoing model development, but this has resulted in a noticeable decline in the output quality of ChatGPT.