OpenAI's AI Chips by 2026, Likely Manufactured by TSMC

July 22, 2024 — OpenAI, the leading generative AI application company backed by Microsoft, is set to embark on a major shift towards self-sufficiency in AI chip production. The company plans to design and manufacture its own AI chips, aiming to reduce reliance on external suppliers. OpenAI has initiated discussions with prominent chip design service providers, including Broadcom. Instead of constructing its own semiconductor fabrication plant, OpenAI is expected to partner with TSMC for chip manufacturing.

Reports suggest that Sam Altman, initially planning to raise $70 billion for a new chip manufacturing facility, has adjusted his strategy following negotiations with TSMC. OpenAI will now focus on establishing a joint venture dedicated to AI chip design, with TSMC handling the production of these chips.

OpenAI has also engaged industry experts, including Richard Ho, former head of Google's TPU division, and a former Lightmatter chip engineering leader, to build a dedicated AI chip design team. Additionally, OpenAI is in discussions with Broadcom regarding chip design services and semiconductor intellectual property.

Broadcom, similar to NVIDIA, has become a significant player in the AI chip market. Its networking and ASIC capabilities facilitate AI server connectivity and customized chip solutions. Over the past year, Broadcom's stock has risen by 78%, reflecting its growing influence in the AI sector.

Industry experts predict that OpenAI's forthcoming AI chips will rival NVIDIA's in performance. However, given the complexity and time required for chip design, these products are not expected to hit the market until at least 2026. Despite advancements in semiconductor manufacturing processes by firms like TSMC, AI design remains a time-consuming and costly endeavor.

The collaboration between OpenAI and TSMC is a pivotal development, influencing Altman’s decision to forgo building a dedicated chip plant. Future focus will be on managing production capacity for both OpenAI’s and NVIDIA’s products, with TSMC poised to offer support if OpenAI commits to significant orders.

The Financial Times has also reported on Altman’s interactions with Broadcom, noting OpenAI’s proactive stance in the competitive AI landscape. As OpenAI and Broadcom collaborate on broader AI industry initiatives, significant funding is required, though OpenAI has not commented further on these plans.