OpenAI, AMD ink massive computing deal, marking new phase of AI boom

The five-year agreement will challenge Nvidia’s market dominance, as OpenAI plans deployment of AMD’s new MI450 chips

- Robbie Whelan & Berber Jin

OpenAI Chief Executive Officer Sam Altman.

(AFP)

OpenAI and chip-designer Advanced Micro Devices announced a multibillion-dollar partnership to collaborate on AI data centers that will run on AMD processors, one of the most direct challenges yet to industry leader Nvidia.

Under the terms of the deal, OpenAI committed to purchasing 6 gigawatts worth of AMD’s chips, starting with the MI450 chip next year. The ChatGPT maker will buy the chips either directly or through its cloud computing partners. AMD chief Lisa Su said in an interview Sunday that the deal will result in tens of billions of dollars in new revenue for the chip company over the next half-decade.

The two companies didn’t disclose the plan’s expected overall cost, but AMD said it costs tens of billions of dollars per gigawatt of computing capacity.

OpenAI will receive warrants for up to 160 million AMD shares, roughly 10% of the chip company, at 1 cent per share, awarded in phases, if OpenAI hits certain milestones for deployment. AMD’s stock price also has to increase for the warrants to be exercised.

Shares of AMD surged more than 35% in premarket trading Monday morning.

The deal is AMD's biggest win in its quest to disrupt Nvidia's dominance among artificial-intelligence semiconductor companies. AMD’s processors are widely used for gaming, in personal computers and traditional data center servers, but it hasn’t made as much of a dent in the fast-growing market for the pricier super-computing chips needed by advanced AI systems.

OpenAI plans to use the AMD chips for inference functions, or the computations that allow AI applications such as chat bots to respond to user queries. As the profusion of large language models and other tools has picked up, demand for inference computing has skyrocketed, OpenAI Chief Executive Officer Sam Altman said in a joint interview with Su.