OpenAI is partnering with Broadcom and Taiwan Semiconductor Manufacturing Company (TSMC) to create its first in-house chip to support the company’s artificial intelligence infrastructure, Reuters reported on Wednesday.
The company has also chosen to diversify its chip supply by adding AMD’s MI300X chips alongside NVIDIA’s GPUs, which dominate the market.
OpenAI had previously considered raising vast sums—reportedly up to $7 trillion—to build its own network of chip foundries. However, the cost and complexity of this ambitious project led the company to pause building such a network and instead focus on designing chips with industry partners.
With a growing need for AI compute power, OpenAI joins industry leaders like Google and Amazon in pursuing a mix of internal chip design and external sourcing. Broadcom, an experienced partner in chip design and manufacturing, has helped OpenAI secure production capabilities with TSMC for its first custom chip, expected to launch in 2026.
Analysts predict the chip, focused on inference tasks, will help OpenAI meet future needs as demand grows for applying AI models in real-time tasks rather than exclusively for training purposes.
Currently, OpenAI heavily relies on NVIDIA’s GPUs, which dominate the AI chip market with over 80% share. However, supply chain constraints and rising costs have led the company to explore partnerships with other chip suppliers. AMD, which projects $4.5 billion in AI chip sales for 2024, is also now supplying OpenAI through Microsoft’s Azure.
The Reuters report added that OpenAI has been mindful of maintaining positive relations with NVIDIA, avoiding aggressive recruiting from the chip giant while continuing to use its high-performance GPUs.
Despite projected 2024 revenues of $3.7 billion, OpenAI anticipates a $5 billion loss due to substantial hardware, electricity, and cloud service expenses. By securing a broader supply chain, the company seeks to manage costs and optimise resources as it scales its AI services, including ChatGPT.
