OpenAI Spends $10 Billion to Get Into the Chip Business

OpenAI would like to stop being so reliant on Nvidia to handle its processing needs. To address that, the artificial intelligence startup is reportedly teaming up with Broadcom to develop its own chips, set to be available starting next year, according to the Financial Times.

The Wall Street Journal reports that OpenAI’s deal with the US-based semiconductor firm will see the two work together to create custom artificial intelligence chips, which will be used internally by OpenAI to train and run its new ChatGPT models and other AI products. The deal will reportedly put $10 billion into the pockets of Broadcom, which had announced a mystery deal on Thursday that apparently didn’t stay all that mysterious for long.

The deal probably shouldn’t be too big a surprise, just given the sheer volume of demand that Nvidia is currently tasked with fulfilling. The company has been the go-to for hyperscalers in the AI space looking to build quickly, producing chips that have become the standard for Amazon Web Services, Google, Microsoft, and Oracle. In fact, Oracle just announced plans to buy more than $40 billion worth of Nvidia chips for use in a new data center that will reportedly be a part of the Stargate Project, a joint effort by AI firms to expand computing infrastructure. Plus, there were hints that OpenAI was working on an in-house chip earlier this year. It appears those plans are now coming to fruition.

OpenAI isn’t the only company trying to wean itself off of its need for Nvidia’s supply of compute. Google has reportedly been calling around to data centers and offering its own custom chips to help handle AI-related processing, according to The Information. Amazon is reportedly working on its own AI chips, and Microsoft has gotten into the chipmaking business, as well.

Nvidia likely won’t be short on demand even with some of the big players attempting to go their own way. Just last week, the company reported that its sales were up 56% in the most recent quarter, suggesting that demand isn’t slowing down. There were also reports last month that the Trump administration may be loosening some of its trade tensions with China and other countries in a way that would allow Nvidia to sell its latest chips overseas, opening the company back up to some major international markets that have been complicated by the trade wars initiated by Trump and company.