OpenAI partners with Broadcom to design custom AI chips

OpenAI has partnered with Broadcom, a major semiconductor company, to design custom artificial intelligence chips, marking the latest major infrastructure deal for the ChatGPT maker. The collaboration will see the companies deploy new racks of customized “AI accelerators” starting late next year, as OpenAI continues building the computing power needed to support its growing user base of over 800 million weekly ChatGPT users.

What you should know: This partnership is part of OpenAI’s broader strategy to secure the specialized hardware and data center capacity required for AI operations.

• OpenAI has recently announced similar partnerships with chipmakers Nvidia and AMD to supply specialized chips for its AI systems.
• The company has also struck major deals with Oracle, CoreWeave, and other data center providers to house these chips.
• CEO Sam Altman said the custom chip development work began more than a year ago.

The big picture: Many of these deals rely on circular financing, where companies are both investing in OpenAI and supplying the startup with technology, fueling concerns about an AI bubble.

• OpenAI doesn’t yet turn a profit despite its massive user growth and $157 billion valuation.
• The startup’s infrastructure needs continue expanding as it scales its AI services globally.

Market impact: Broadcom shares surged more than 9% on Monday following the morning announcement.

• The partnership represents significant business for Broadcom’s chip design and manufacturing capabilities.
• Broadcom CEO Hock Tan emphasized the scale of the collaboration, mentioning “10 gigawatts of next generation accelerators and network systems.”

What they’re saying: OpenAI CEO Sam Altman framed the partnership within the company’s broader mission.

• “Developing our own accelerators adds to the broader ecosystem of partners all building the capacity required to push the frontier of AI to provide benefits to all humanity,” he said in a statement.
• Broadcom CEO Hock Tan said: “We are thrilled to co-develop and deploy 10 gigawatts of next generation accelerators and network systems to pave the way for the future of AI.”

Why this matters: Custom chip development allows OpenAI to optimize hardware specifically for its AI models, potentially improving performance and reducing long-term costs as the company works toward profitability while serving hundreds of millions of users.