Situational Awareness Invests $400 Million in Chip Startup Source Foundry

AI-focused hedge fund Situational Awareness has invested $400 million in Source Foundry, a semiconductor startup founded by Stanford researchers that is working to make chip manufacturing faster and less expensive.

The latest investment brings Situational Awareness’ total commitment to Source Foundry to $500 million, according to The Wall Street Journal. The deal represents a major private-market bet for the fund after a difficult period for its public investments.

Situational Awareness was founded in 2024 by Leopold Aschenbrenner, a former OpenAI researcher who was in his mid-twenties and had no previous trading experience when he launched the fund.

The fund reportedly generated strong returns early on, benefiting from enthusiasm around artificial intelligence and related infrastructure companies. More recently, however, falling AI infrastructure stocks contributed to substantial losses.

Fund sold most of its public portfolio

At the end of July, Situational Awareness sold the majority of its public portfolio to Citadel, the investment firm founded by Ken Griffin. The fund retained its shares in AI company Anthropic.

Situational Awareness’ assets under management reportedly declined from about $20 billion to $10 billion during the downturn.

Despite those setbacks, the fund is continuing to make large investments in companies it believes could benefit from the expansion of AI infrastructure.

Source Foundry is focused on improving semiconductor manufacturing, an increasingly important part of the AI industry as demand for advanced computing hardware continues to grow. Its goal is to develop technology that can make producing chips both faster and cheaper.

The additional $400 million investment shows that Situational Awareness remains willing to make concentrated bets on AI infrastructure even after significantly reducing its exposure to publicly traded companies.