Following Zuckerberg, Sam Altman Eyes Nvidia Alternative; OpenAI May Tap New Chip Supplier

OpenAI CEO Sam Altman is reportedly looking beyond Nvidia for AI chip solutions, potentially forging a partnership with Amazon. This follows similar moves by other tech giants like Meta, signaling a possible shift in the AI chip market.

Sources indicate that OpenAI is in early discussions with Amazon to secure over $10 billion in funding. A key aspect of the deal involves OpenAI potentially utilizing Amazon's Trainium chips. If realized, this could pose a significant challenge to Nvidia's current dominance in the AI semiconductor sector. The Information initially reported on these discussions, suggesting the deal could value OpenAI at over $500 billion.

This potential collaboration surfaces shortly after reports that Meta Platforms is evaluating Google's tensor processing units as a substitute for Nvidia's graphics processors. These moves highlight the increasing competition and diversification within the AI chip landscape.

Amazon's semiconductor division stands to gain significantly from this potential partnership. Currently, Nvidia commands over 90% of the AI chip market. That said, the reality is a bit more complicated. major players like Meta and now potentially OpenAI are exploring alternative offerings from Amazon and Google's Alphabet.

The discussions between OpenAI and Amazon reportedly began around October, subsequent to a corporate restructuring at OpenAI. This restructuring, which granted Microsoft a 27% ownership stake after nearly a year of negotiations, has provided OpenAI with greater flexibility to raise capital and form partnerships across the broader AI ecosystem. Amazon Web Services (AWS) has been developing AI chips since approximately 2015, with this hardware becoming increasingly vital for AI companies seeking to train models and meet the escalating demand for computing power. AWS introduced its Inferentia chips in 2018 and recently launched the latest generation of Trainium chips.

OpenAI has recently engaged in a series of infrastructure agreements, committing over $1.4 trillion. These deals include partnerships with chipmakers Nvidia, Advanced Micro Devices, and Broadcom. In the previous month, OpenAI signed a $38 billion agreement with AWS to secure capacity, marking its first major deal with the cloud infrastructure provider. The potential investment from Amazon comes as Nvidia faces increased scrutiny regarding potential "circular deals" within the AI ecosystem. In September, Nvidia announced plans to invest $100 billion in OpenAI, although CFO Colette Kress indicated in early December that the agreement remains unfinalized. Since 2019, Microsoft has invested over $13 billion in OpenAI, while Amazon has invested at least $8 billion in OpenAI competitor Anthropic. Microsoft recently announced an investment of up to $5 billion in Anthropic, with Nvidia committing up to $10 billion to the startup.