(Reuters) -OpenAI has partnered with Broadcom to produce its first in-house AI processors, the latest chip tie-up for the ChatGPT maker as it races to secure the computing power needed to meet growing demand for its services.
Broadcom shares rose more than 12% in premarket trading.
The companies said Monday that OpenAI would design the chips, which Broadcom will develop and deploy starting in the second half of 2026. They will launch 10 gigawatts worth of custom chips, whose power consumption is roughly equivalent to the needs of more than 8 million American homes or five times the electricity produced by the Hoover Dam.
The deal is the latest in a series of massive investments in AI chips that have highlighted the tech industry’s growing appetite for computing power as it races to build systems that match or surpass human intelligence.
OpenAI last week unveiled a 6-gigawatt AI chip supply deal with AMD that includes an option to buy a stake in the chipmaker, days after revealing that Nvidia plans to invest up to $100 billion in the startup and provide it with data center systems with at least 10 gigawatts of capacity.
“Partnering with Broadcom is a critical step in building the infrastructure needed to unlock the potential of AI,” OpenAI CEO Sam Altman said in a statement.
Financial details of the deal were not disclosed and it was not immediately clear how OpenAI would finance the deal.
CUSTOM CHIP BOOM
The alliance with Broadcom, first reported by Reuters last year, places OpenAI among cloud computing giants such as Google and Alphabet-owned Amazon.com, which are developing custom chips to meet growing demand for AI and reduce reliance on expensive Nvidia processors, which are in limited supply.
The approach is not a safe bet. Similar efforts by Microsoft and Meta have suffered delays or failed to match the performance of Nvidia’s chips, according to media reports, and analysts believe that custom chips do not pose a threat to Nvidia’s dominance in the near term.
However, the rise of custom chips has made Broadcom, long known for its networking hardware, one of the biggest winners from the generative AI boom, and its share price has risen nearly six-fold since late 2022.
The company in September unveiled a successful $10 billion order for custom AI chips from an unnamed new customer that some analysts and market watchers speculated was OpenAI.
Broadcom and OpenAI said on Monday that deployment of the new custom chips would be completed by the end of 2029, building on their existing joint development and supply agreements.