OpenAI and Advanced Micro Devices (AMD) have entered a multibillion-dollar partnership to develop AI data centers powered by AMD processors, directly challenging industry leader Nvidia.
Key Details of the Partnership
- OpenAI will purchase 6 gigawatts of AMD chips, starting with the MI450 model next year, through direct or cloud-based arrangements.
- AMD CEO Lisa Su estimates the deal could generate tens of billions of dollars in new revenue over the next five years.
- OpenAI will receive warrants for up to 160 million AMD shares (around 10% of AMD), priced at 1 cent per share, awarded based on deployment milestones and stock performance.
- The chips will be primarily used for AI inference tasks, addressing the rapidly growing demand for AI computing resources.
Strategic Implications
Both OpenAI and AMD highlighted the strategic benefits of the partnership, emphasizing its significance for the booming AI infrastructure market. Despite Nvidia holding over 70% market share, competition is intensifying from AMD, Google, Amazon, and Broadcom.
Other OpenAI Partnerships
- OpenAI also signed a $10 billion deal with Broadcom for additional AI chip capacity.
- An agreement with Oracle worth $300 billion will further expand OpenAI’s cloud computing resources.
- OpenAI plans to spend $16 billion on server rentals in 2025, potentially reaching $400 billion by 2029, while generating $13 billion in revenue in 2025.
Market Context
While Nvidia continues to dominate the AI chip market, AMD’s collaboration with OpenAI marks a major step in challenging this position. Mizuho Securities estimates that Nvidia’s top AI chips can cost up to $60,000 each.
Conclusion
The AMD deal is now definitive and will be filed with regulators, signaling a significant shift in the AI hardware landscape. OpenAI’s aggressive infrastructure expansion reflects its goal to advance superintelligent AI while navigating the rapidly growing and expensive AI computing market.
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