OpenAI Could Soon Start Making Its Own AI Chips – And It Could Change Everything

OpenAI, the organization behind ChatGPT, is considering the development of its own artificial intelligence (AI) chips and has explored potential acquisition opportunities, according to insiders. While no final decision has been made, OpenAI has been grappling with the challenge of securing expensive AI chips, which are essential for their work.

CEO Sam Altman has identified the acquisition of additional AI chips as a top priority due to concerns over a shortage of advanced processors and the high costs associated with powering their AI endeavors. OpenAI currently relies on a supercomputer built by Microsoft, equipped with 10,000 Nvidia graphics processing units (GPUs), to develop its generative AI technologies.

Running ChatGPT is costly, with an estimated cost of around 4 cents per query. To scale to a fraction of Google’s search volume, OpenAI would need billions of dollars worth of GPUs initially and billions more annually to sustain operations.

OpenAI’s potential move into designing custom AI chips would align them with tech giants like Google and Amazon, who have pursued chip design to meet their unique needs.

However, developing custom chips is a substantial and risky undertaking, potentially costing hundreds of millions of dollars annually. An alternative strategy could involve acquiring an existing chip company to expedite the process, similar to Amazon’s acquisition of Annapurna Labs in 2015. The specific target of OpenAI’s acquisition considerations remains undisclosed.

Even if OpenAI proceeds with its custom chip plans, the transition is expected to take several years, making the organization reliant on commercial chip providers like Nvidia and Advanced Micro Devices in the interim.

Other tech companies have faced challenges in building their own processors, with Meta, formerly Facebook, encountering difficulties in its custom chip efforts.

Additionally, Microsoft, a major backer of OpenAI, is reportedly developing its own custom AI chip, potentially indicating a shift in their partnership.

The demand for specialized AI chips has surged following the launch of ChatGPT, as these chips are crucial for training and running advanced generative AI models. Nvidia currently dominates this market, producing highly sought-after AI chips.

In summary, OpenAI is exploring the possibility of creating its own AI chips or acquiring a chip company to address the shortage and high costs of AI chips. While these plans are not finalized, they align with a broader trend among tech giants to design their own chips for specific applications. However, the challenges and investments involved in such endeavors are substantial, and the transition could take several years, leaving OpenAI reliant on existing chip suppliers in the meantime.