OpenAI and Broadcom Strike a Deal for a New AI Chip

Though an official announcement has yet to be made, Broadcom and OpenAI look to be collaborating on a new AI chip. The Financial Times reported the deal, which would produce the first AI chip of OpenAI’s own. OpenAI has been looking for ways to diversify its hardware, which is currently dominated by AMD and Nvidia.
Moving to a proprietary AI chip is par for the course, at the moment. As Reuters points out, Amazon, Google, and Meta have all sunk money into custom AI hardware. With AI’s biggest players looking to add hardware to the supply provided by Nvidia, Broadcom appears to have seized a lucrative opportunity. Reuters put the possible boost to Broadcom’s valuation at an additional $200 billion.
Though Broadcom hasn’t announced the deal, a contract with OpenAI seems likely. A separate report by Reuters noted that Broadcom has a new, unnamed client with a $10 billion AI chip order. Analysts also point to OpenAI as the customer, and Broadcom’s stock price has risen. Since earlier this year, reports have suggested that OpenAI and Broadcom are collaborating on a chip. Based on those reports, it looks like 2026 could see mass production of OpenAI’s chip.
Broadcom doesn’t fabricate chips, so the new AI chips for OpenAI (assuming that the reports are correct) could be manufactured by TSMC. TSMC is known to be discreet about its clients and the hardware it produces for them, so don’t expect any announcement from it, but TSMC has the capabilities and capacity to handle an order like this.
Whether Nvidia views the possible Broadcom-OpenAI deal as a threat remains to be seen. The AI hardware giant—which was primarily a gaming company not all that long ago—has seen massive, multi-billion-dollar revenue gains quarter after quarter, thanks to the AI capabilities of its hardware. As CNBC pointed out this summer, Nvidia’s share of the AI chip market is more than 70%. Entrepreneur, which estimated Nvidia could have about an 85% share, put AMD’s share of the AI market at about 14%. Anything can happen (just ask Nvidia), but the company’s position at this point doesn’t look too shabby.
By the way, if you’ve been holding off on digging into the meat of how AI services like OpenAI’s ChatGPT work, it might be time for a primer. Our overview will help make sense of the flood of AI-related news headed your way.
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