OpenAI builds first chip with Broadcom and TSMC, scales back foundry ambition

OpenAI is working with Broadcom and TSMC to build its first in-house chip designed to support AI, per sources

OpenAI is working with Broadcom and TSMC to build its first in-house chip designed to support its artificial intelligence systems, while adding AMD chips alongside Nvidia chips to meet its surging infrastructure demands, sources told Reuters.

OpenAI, the fast-growing company behind ChatGPT, has examined a range of options to diversify chip supply and reduce costs. OpenAI considered building everything in-house and raising capital for an expensive plan to build a network of factories known as "foundries" for chip manufacturing.

The company has dropped the ambitious foundry plans for now due to the costs and time needed to build a network, and plans instead to focus on in-house chip design efforts, according to sources, who requested anonymity as they were not authorised to discuss private matters.

The company's strategy, detailed here for the first time, highlights how the Silicon Valley startup is leveraging industry partnerships and a mix of internal and external approaches to secure chip supply and manage costs like larger rivals Amazon, Meta, Google and Microsoft. As one of the largest buyers of chips, OpenAI's decision to source from a diverse array of chipmakers while developing its customised chip could have broader tech sector implications.

Broadcom stock jumped following the report, finishing Tuesday's trading up over 4.5%. AMD shares also extended their gains from the morning session, ending the day up 3.7%.

OpenAI, AMD and TSMC declined to comment. Broadcom did not immediately respond to a request for comment.

OpenAI, which helped commercialise generative AI that produces human-like responses to queries, relies on substantial computing power to train and run its systems. As one of the largest purchasers of Nvidia’s graphics processing units (GPUs), OpenAI uses AI chips both to train models where the AI learns from data and for inference, applying AI to make predictions or decisions based on new information. Reuters previously reported on OpenAI's chip design endeavors. The Information reported on talks with Broadcom and others.