OpenAI and chipmaker Advanced Micro Devices (AMD) announced a colossal multibillion-dollar AI chip deal on Monday, October 6.
Sam Altman’s artificial intelligence start-up has agreed to buy six gigawatts of AMD’s high-performance Instinct graphics processing units (GPUs), starting with their most-advanced MI450.
The semiconductor manufacturer confirmed OpenAI pledged to build a one-gigawatt facility for the upcoming delivery of the high-tech chips, with shipments set to begin in the second half of 2026.
The agreement also allows OpenAI to acquire 160 million shares or 10% of AMD at $0.01 per share.
According to the press release, that option is contingent upon AMD “achieving certain share-price targets” and OpenAI reaching “the technical and commercial milestones required to enable AMD deployments at scale”.
Reaction to the deal
The blockbuster agreement, which is expected to bring billions of dollars of revenue to AMD, sent the manufacturer’s share price soaring by more than 30% on Monday, adding another $80 billion to its market capitalisation.
“We are thrilled to partner with OpenAI to deliver AI compute at massive scale,” said Dr. Lisa Su, chair and CEO of AMD.
“This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world’s most ambitious AI buildout and advancing the entire AI ecosystem.”
“This partnership is a major step in building the compute capacity needed to realise AI’s full potential,” said Sam Altman, co-founder and CEO of OpenAI.
“AMD’s leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster.”
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Significance of the deal
The AMD deal is the latest attempt by the San Francisco-based start-up to ensure a constant supply of computing power that would help the company build more data-processing centres to further develop and train its AI models.
Last month, the company signed another partnership agreement worth $100 billion with AMD’s strongest rival and world-leading chipmaker Nvidia for at least 10 gigawatts of data centre capacity.
Business analysts believe the new deal is a vote of confidence in AMD’s ability to deliver high-quality GPUs while it aims to diversify OpenAI’s chip suppliers and reduce its dependence on single vendors such as Nvidia.
“AMD has really trailed Nvidia for quite some time. So, I think it helps validate their technology,” Leah Bennett, chief investment strategist at Concurrent Asset Management, said.
Tom O’Malley, an analyst at Barclays, claims the deal is a sign of the scale of computing power needed to satisfy AI development, rather than an attempt to steal a larger portion of Nvidia’s market share.
“We realise there will be delays with these deals, and that the infrastructure required largely doesn’t exist today, but we would again highlight this as a proof point that the ecosystem is desperate for more compute,” he said.
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Further evidence in support of that perspective is OpenAI’s commitment to buy yet another $300 billion worth of computing power from Oracle and partners in the next five years, bringing its total capacity to 23 gigawatts and the overall costs well above $1 trillion.
Asked if such colossal investments in artificial intelligence technology are “getting ahead of themselves”, AMD’s chair and CEO Lisa Sue said, “that’s probably thinking too small”.
And claimed that now is the right time to heavily invest in AI “because [we] will be rewarded” for doing “things that you previously thought weren’t possible”.
“You have to really look at… what the power of this technology can do for the world.
“And if you think about all of the applications that can take advantage of AI and computing and… sort of the massive investments that will have… [there will be] significant returns on the other end,” she added.
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