How AMD came from behind to mount a challenge in the AI chip wars

When Lisa Su took over as chief executive of chip company Advanced Micro Devices in 2014, the company’s market value was just under $3 billion.

- Robbie Whelan

OpenAI will buy tens of thousands of AMD chips to power 6GW of computing capacity for inference functions.

(BLOOMBERG)

Today, it is worth more than $330 billion, a more-than-hundredfold increase that reflects how deftly AMD has pivoted from a strategy of mainly producing graphics cards for gaming and personal-computer processors to more tightly focusing on the data-center chips that power the artificial-intelligence revolution.

AMD’s share price rose 24% on Monday after the company announced a partnership with OpenAI, maker of the popular consumer AI model ChatGPT. Under the terms of the deal, OpenAI will buy tens of thousands of AMD chips to power 6 gigawatts of computing capacity for inference functions, which allow AI models to respond to user queries.

The deal has given rocket fuel to AMD’s share price and the company’s ambitions to compete with rival chip designer Nvidia, which is by far the dominant competitor in the AI semiconductor industry.

Monday’s deal specifies that OpenAI will be issued warrants for 160 million shares of AMD stock, at a marginal price of 1 cent a share, once OpenAI hits certain deployment targets and once AMD’s share price rises.

The final tranche of shares will be granted only if AMD’s stock hits $600 a share, which would give AMD a trillion-dollar valuation.