Broadcom will make custom AI chips for OpenAI
What's the story
OpenAI has announced a partnership with Broadcom to develop its first in-house artificial intelligence (AI) processors. The move comes as part of OpenAI's strategy to meet the growing demand for its services. Under the agreement, OpenAI will design these chips while Broadcom will develop and deploy them starting from the second half of 2026.
Energy impact
Chips to consume 10GW of power
The partnership plans to roll out custom chips with a total power consumption of 10GW. To put this into perspective, that's enough energy to power over eight million US households or five times the electricity produced by the Hoover Dam. This deal is just one among many huge investments in AI chips, underscoring the tech industry's growing demand for computing power as it races to build systems that can match or exceed human intelligence.
Strategic partnerships
AMD deal precedes NVIDIA's $100B investment in OpenAI
Last week, OpenAI announced a 6GW AI chip supply deal with AMD. The agreement also includes an option to buy a stake in the chipmaker. This comes just days after NVIDIA's announcement of plans to invest up to $100 billion in OpenAI and provide data-center systems with at least 10GW of capacity. "Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI's potential," said Sam Altman, CEO of OpenAI.
Chip strategy
Aligns OpenAI with cloud giants like Google and Amazon
The partnership with Broadcom brings OpenAI in line with cloud-computing giants such as Google and Amazon. These companies are also developing custom chips to meet surging AI demand while reducing dependence on NVIDIA's expensive processors that are in short supply. However, it's worth noting that similar efforts by Microsoft and Meta have faced delays or failed to match the performance of NVIDIA chips.
Deployment details
Deployment of new chips expected by end of 2029
The deployment of the new chips is expected to be completed by the end of 2029. This will build on their existing co-development and supply deals. The new systems will be scaled entirely using Broadcom's Ethernet and other networking gear, giving it an edge over smaller rivals such as Marvell Technology while challenging NVIDIA's InfiniBand networking solution.