Late last month, OpenAI made headlines by announcing a massive $100 billion agreement to procure computer chips from Nvidia, currently the world’s most valuable publicly traded company.
Following closely on the heels of that colossal deal, OpenAI has now forged a similar partnership with AMD. This move positions AMD as another key player in the fiercely competitive market of chip manufacturing, vying with Nvidia to be the primary supplier for advanced AI technologies such as OpenAI’s ChatGPT.
OpenAI confirmed on Monday that it plans to integrate AMD chips into its operations starting in the latter half of next year, as it constructs new, advanced computer data centers. These new facilities will operate independently from the existing data centers OpenAI is developing in states like Texas, New Mexico, and Ohio, along with an upcoming location in the Midwest.
Over the coming years, OpenAI intends to deploy AMD chips requiring a staggering 6 gigawatts of power—enough to energize every household in the entire state of Massachusetts. This follows their previous commitment with Nvidia to utilize chips that would consume 10 gigawatts.
While AMD itself is not making a direct investment in OpenAI, the agreement includes a significant provision: OpenAI can purchase up to 160 million shares in AMD at a mere penny per share. This would grant OpenAI a 10 percent ownership stake in the chipmaker and could also provide OpenAI with crucial additional capital as it undertakes the construction of new computing infrastructure in the years ahead.
This strategic partnership aligns with a broader industry trend where tech giants are pouring hundreds of billions into building massive new data centers. Collectively, companies like OpenAI, Amazon, Google, Meta, and Microsoft are projected to invest over $325 billion in these facilities by the close of this year alone.
Established tech behemoths such as Amazon, Microsoft, and Google, with their annual profits soaring into the tens of billions, possess the financial muscle to fund their data center expansions using readily available cash. In contrast, emerging players like OpenAI, while ambitious in their infrastructure development, have had to secure or borrow tens of billions of dollars to fuel their growth.
Under its ambitious ‘Stargate Project,’ OpenAI had previously announced plans to collaborate with cloud computing giant Oracle and Japanese conglomerate SoftBank to invest over $400 billion in constructing new data centers across the United States. However, the startup and its partners currently lack the full financial resources required for such a monumental undertaking. This has prompted OpenAI to explore innovative strategies to close this significant funding gap.
The recent agreement with Nvidia saw OpenAI commit to deploying Nvidia’s cutting-edge chips. Crucially, it also came with a substantial $100 billion investment from Nvidia. Following an initial $10 billion injection, Nvidia is set to invest an additional $90 billion into OpenAI over the coming years. This latest deal highlights a recurring pattern of OpenAI securing significant funding from the very companies whose products and services it utilizes.
(It’s worth noting that The Times initiated a lawsuit against OpenAI and Microsoft in 2023, alleging copyright infringement of its news content in relation to their AI systems. Both companies have publicly denied these claims.)