OpenAI, the company behind ChatGPT, is facing a significant financial challenge with projected losses of $5 billion this year.

The main culprits are the high costs of training AI models and hiring talent, with estimated expenditures of $7 billion and $1.5 billion respectively. Despite its $80 billion valuation and rapid growth, OpenAI needs to secure additional funding within the next year to stay afloat.

The company has already raised $11.3 billion through seven funding rounds but may need more to avoid depleting its cash reserves. OpenAI has also shifted its focus from building its own semiconductor fabs to a joint venture with TSMC on chip design, aiming to reduce its reliance on NVIDIA chips. However, the financial struggles highlight the challenges faced by rapidly growing AI companies.