OpenAI is set to begin mass production of its first proprietary artificial intelligence chip next year through a partnership with Broadcom Inc. (NASDAQ:AVGO), marking a strategic shift away from its reliance on Nvidia Corp. (NASDAQ:NVDA) amid surging demand for artificial intelligence computing power.
Broadcom Secures $10 Billion Customer Deal
Broadcom CEO Hock Tan confirmed during Thursday’s earnings call that the semiconductor giant secured a fourth major customer committing to $10 billion in orders. The Financial Times sources identified OpenAI as the new client.
The deal delivered “immediate and fairly substantial demand” that will boost chip shipments “pretty strongly” starting next year, according to Tan.
Broadcom’s shares jumped 4.58% to $306.10 in after-market trading following the positive earnings report.
OpenAI and Broadcom did not immediately respond to Benzinga's request for comment.
Strategic Move Toward Computing Independence
OpenAI’s custom chip initiative follows the playbook of tech giants including Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG), Amazon.com Inc. (NASDAQ:AMZN) and Meta Platforms Inc. (NASDAQ:META), which have developed specialized processors to handle AI workloads more efficiently than standard graphics processing units.
The partnership began last year, but the timeline for mass production remained unclear until this week’s announcement. OpenAI plans to use the chips internally rather than making them available to external customers, according to the FT report, addressing its massive compute requirements for ChatGPT’s 700 million weekly users.
Market Impact on AI Infrastructure
The custom chip development signals a potential shift in the AI hardware landscape, where Nvidia has maintained dominance. According to FT, HSBC analysts expect custom chip businesses to achieve higher growth rates than Nvidia’s GPU business by 2026.
OpenAI CEO Sam Altman recently emphasized the company’s compute priorities, stating plans to double its compute fleet over the next five months to meet increased demand from the upcoming GPT-5 model.
The development comes as OpenAI reportedly moves forward with a $10.3 billion secondary share sale at a $500 billion valuation, up from its previous $300 billion valuation established in April.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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