OpenAI Chooses Broadcom For AI Interface Chip Development

OpenAI has partnered with Broadcom Inc AVGO and Taiwan Semiconductor Manufacturing Co TSM to build this in-house chip.

The ChatGPT parent added Advanced Micro Devices Inc AMD as a chip supplier to better address artificial intelligence demands. Broadcom, AMD, and Taiwan Semiconductor’s stocks gained after the report.

Also Read: Intel Partners With AMD To Counter Arm’s Rising Dominance in Computing

OpenAI is ramping up efforts to produce its chip designed to power advanced AI systems, Reuters reports.

OpenAI’s move reflects its plans to seek alternatives to manage costs better and reduce dependency on existing suppliers like Nvidia Corp NVDA.

Broadcom has been working closely with OpenAI to develop this chip, which primarily focuses on “inference” — applying AI models to make decisions based on new data. As demand for inference chips grows, OpenAI’s custom-built chip could eventually support more applications, complementing its reliance on training chips provided by Nvidia.

Securing access to manufacturing capacity with Taiwan Semiconductor has been part of the process. Sources indicate OpenAI plans to produce its first custom-designed chip by 2026.

Another notable development is collaboration with AMD. Through Microsoft Corp MSFT Azure, OpenAI will utilize AMD’s MI300X chips.

Recent analyst takes on Broadcom and AMD

JPMorgan analyst Harlan Sur highlights semiconductors as a top investment area for 2024, predicting a solid up-cycle after 2023’s sector bottom. Sur noted Broadcom and Marvell Technology Inc MRVL as critical players poised for growth, especially in cloud infrastructure and custom AI chips.

Goldman Sachs analysts, led by Toshiya Hari, underscored the sustained expansion of AI infrastructure spending across industries as a driving force behind their bullish take on AMD. Hari flagged increased capital investments from large enterprises engaged in an “AI arms race.”

Price Actions: At the last check on Tuesday, AVGO stock was up 3.84% to $176.62. AMD is up 3.48%, and TSM is up 1.51%.

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