Just last month, OpenAI made headlines with a staggering $100 billion agreement to source advanced computer chips from Nvidia, a company renowned as the world’s most valuable in public trading. Building on that momentum, OpenAI has now forged a comparable partnership with AMD. This move positions AMD among a growing number of chip manufacturers eager to compete with Nvidia for supremacy in supplying the critical hardware that powers cutting-edge AI technologies, including OpenAI’s own ChatGPT.
OpenAI confirmed on Monday that it plans to integrate AMD chips into its operations starting in the latter half of next year. This is part of their strategy to construct new, dedicated data centers. These upcoming facilities will operate independently from the previously announced data centers slated for construction in Texas, New Mexico, Ohio, and another Midwestern location yet to be disclosed.
Over the next few years, OpenAI intends to deploy AMD chips requiring a massive 6 gigawatts of power—an amount equivalent to supplying electricity to every household in Massachusetts. This commitment follows a separate agreement with Nvidia, where OpenAI pledged to utilize chips consuming an even larger 10 gigawatts.
While AMD isn’t directly investing in OpenAI, the deal includes a unique clause: OpenAI can acquire up to 160 million shares in AMD at a symbolic price of one penny per share. This could grant OpenAI a 10% ownership stake in the chipmaker and potentially provide significant capital to fund its extensive data center expansion over the coming years. The announcement sent AMD’s shares soaring, with a premarket jump of over 20% on Monday.
This partnership is indicative of a broader industry trend where tech giants are pouring hundreds of billions into building new data centers. Companies like OpenAI, Amazon, Google, Meta, and Microsoft collectively plan to invest over $325 billion in these infrastructure projects just by the close of this year.
Established tech giants such as Amazon, Microsoft, and Google, boasting tens of billions in annual profits, can typically self-finance such massive data center developments. However, newer and smaller players like OpenAI find themselves in a different position, often needing to secure tens of billions through fundraising or loans to fund their ambitious computing infrastructure.
For instance, through its ambitious Stargate Project, OpenAI had previously disclosed plans to collaborate with cloud provider Oracle and Japanese conglomerate SoftBank on over $400 billion worth of new data centers across the United States. Recognizing that neither the startup nor its partners currently possess the full capital required, OpenAI has been actively seeking innovative financing solutions to close this substantial funding gap.
The recent Nvidia agreement exemplifies this strategy: OpenAI committed to deploying Nvidia’s chips, and in return, Nvidia pledged a $100 billion investment. This investment includes an initial $10 billion, with an additional $90 billion planned over the coming years. Such arrangements highlight OpenAI’s approach of securing crucial funding directly from its technology suppliers.
It’s worth noting that a lawsuit for copyright infringement concerning AI systems was filed against OpenAI and Microsoft by The Times in 2023, though both companies have denied the claims.