OpenAI Explores Building Its Own AI Chips, Considers Potential Acquisition

OpenAI, the company behind the popular ChatGPT, is reportedly considering the development of its own artificial intelligence chips. According to sources familiar with the matter, OpenAI has evaluated a potential acquisition target as part of its exploration into chip manufacturing. While no final decision has been made, the company has been actively discussing options to address the shortage of expensive AI chips it relies on.

OpenAI’s CEO, Sam Altman, has prioritized acquiring more AI chips due to the scarcity of graphics processing units (GPUs), which are essential for running AI applications. Nvidia currently dominates the market with over 80% share. Altman has expressed concerns about the high costs associated with running the hardware necessary to power OpenAI’s efforts and products.

To date, OpenAI has been using Microsoft’s supercomputer, which utilizes 10,000 Nvidia GPUs, to develop its generative AI technologies. However, running ChatGPT is expensive, with each query costing approximately 4 cents. If ChatGPT queries were to reach a scale similar to Google search, it would require billions of dollars worth of GPUs annually.

Building its own AI chips would place OpenAI in the company of tech giants like Google and Amazon, who have also sought to design their own chips. However, developing custom chips would be a significant strategic initiative and a substantial investment, potentially costing hundreds of millions of dollars per year.

While an acquisition of a chip company could expedite the process, OpenAI has not disclosed the identity of the potential acquisition target it considered. Even if OpenAI proceeds with its plans, including an acquisition, it is expected to take several years before the company becomes self-reliant, leaving it dependent on commercial providers like Nvidia and Advanced Micro Devices in the interim.

It is worth noting that some tech companies have faced challenges in building their own processors. Meta, formerly known as Facebook, encountered issues with its custom chip efforts and had to abandon some of its AI chips. OpenAI’s main backer, Microsoft, is also developing a custom AI chip that the company is currently testing.

The increasing demand for specialized AI chips, driven by the success of ChatGPT, has prompted OpenAI to explore alternative solutions. Nvidia’s dominance in the market has created a need for OpenAI to diversify its chip suppliers and potentially develop its own chips.

While OpenAI’s plans are still in the exploratory stage, the company’s pursuit of AI chip development highlights its commitment to advancing AI technology and reducing reliance on external providers.