In the Shadows: OpenAI's Urge to Expand Variety in Chip Sourcing
In a significant move, OpenAI, the leading AI research firm known for its popular chatbot, ChatGPT, has announced a partnership with Broadcom to develop its first artificial intelligence (AI) chip. This strategic collaboration is expected to bear fruit next year, as the chip is currently in the works.
The AI hardware market, as explained by industry analyst Nikul Shah, is too vast for one company to dominate alone. This partnership underscores the growing importance of custom AI chips in the industry, with tech giants like Google, Amazon, and Meta already boasting their own custom chips for AI workloads.
Nvidia, a key player in the discrete graphics card market, holds a 94% share, according to Jon Peddie Research. However, the company's revenues are heavily concentrated on two major customers, which could potentially pose a challenge in the long run. In fact, two anonymous customers contributed a cumulative 39% share of Nvidia's record $46.7 billion revenue in the second quarter of 2025.
Broadcom, on the other hand, has been thriving, posting strong third-quarter results and securing a USD 10 billion deal for custom chips with a new customer. The company's market cap has risen to over USD 1.4 trillion, reflecting its growing influence in the semiconductor industry.
OpenAI's ChatGPT has garnered a significant number of users since its launch, making it the second-largest market by users in India, where weekly active usage has quadrupled over the past year. OpenAI's serious interest in India is further evidenced by its plans to launch an office in New Delhi and hire for senior sales roles.
The central government in India has also committed nearly INR 629 billion (US$7.17 billion) for semiconductor production under the India Semiconductor Mission. This move is part of India's broader strategy to join the AI race, with the government approving 10 projects in areas of strategic importance, including semiconductor production.
As the AI race heats up, OpenAI faces competition from companies like Google, Meta, Perplexity, and others. An in-house chip could give OpenAI a strategic advantage in the market, potentially reducing its reliance on third-party suppliers and enhancing its AI capabilities.
The partnership between OpenAI and Broadcom was first reported by the Financial Times. The chip, designed for internal purposes by OpenAI, could mark a significant step forward in the development of AI technology. As the industry continues to evolve, firms with expertise in custom ASICs, embedded systems, and domain-specific chips will be well positioned to compete.
Meanwhile, the prices of AI hardware have seen some fluctuations. AIB prices dropped for midrange and entry-level graphics cards, while high-end AIB prices increased, and most retail suppliers ran out of stock, indicating a growing demand for advanced AI technology.
In conclusion, the partnership between OpenAI and Broadcom signifies a significant development in the AI industry. As the race to develop advanced AI technology continues, it is clear that custom AI chips will play a crucial role in the future of AI. The collaboration between OpenAI and Broadcom is a testament to this fact and is likely to shape the future of AI technology.
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