OpenAI, the developer of ChatGPT, has entered into a strategic partnership with Broadcom to produce its first self-produced artificial intelligence processor. This move is considered one of the most important steps the company has taken to meet its growing demand for processing power and reduce its dependence on Nvidia. Broadcom shares rose more than 7% following the announcement of the partnership. OpenAI signed a 6-gigawatt chip supply agreement with AMD last week, and also announced that Nvidia plans to invest up to $100 billion in the company. CEO Sam Altman said, “Collaboration with Broadcom is a critical step in building the infrastructure to unlock the potential of artificial intelligence.”
The AI Chip Race Heats Up
With this agreement, OpenAI joins giants like Google and Amazon, which develop their own custom chips. Companies are turning to custom-designed chips to reduce their dependence on high-cost Nvidia GPUs.
However, this strategy is risky. Similar chip projects from companies like Microsoft and Meta have been criticized for delays and performance issues. Experts state that these initiatives will not shake Nvidia’s market dominance in the short term.
Broadcom’s Great Leap
Broadcom has increased its stock value sixfold since the end of 2022 and has become one of the biggest winners in the AI hardware market.
The company announced last September that it had received a $10 billion private chip order — market analysts believe this customer is OpenAI. The new chip systems will be completed by 2029 and will scale fully with Broadcom’s Ethernet and networking hardware. This will give the company an advantage over competitors like Marvel Technology and offer the opportunity to directly compete with Nvidia’s InfiniBand technology. The new chip systems will be completed by 2029 and will scale fully with Broadcom’s Ethernet and networking hardware.
