OpenAI announces Broadcom deal as spending spree continues

NEW YORK

OpenAI, the company behind ChatGPT, has announced it is teaming up with chip giant Broadcom to design and build its own specialized computer processors for artificial intelligence.

The partnership is the latest in a series of recent announcements by OpenAI as it seeks to strengthen its position as the preeminent company of the generative AI revolution that began with the release of ChatGPT in November 2022.

The partnership, which the companies said would launch next year, would provide 10 gigawatts in computing power, requiring roughly the energy equivalent needed to power a major city.

In the past few weeks, under the leadership of CEO Sam Altman, OpenAI has signed deals involving huge investments in data centers and AI chips with U.S. companies Nvidia, AMD, and Oracle, as well as with South Korea's Samsung and SK Hynix.

The partnerships come as there are no real signs that the AI business is close to breaking even, despite strong growth and intense investor interest.

The deals to build AI's immense infrastructure needs also threaten to overburden electricity providers, with AI chips and data centers demanding significant power and resources to deliver the required computing capacity.

The financial terms of the deal with Broadcom were not part of the announcement and remain unclear for many of the recent deals involving OpenAI.

That has drawn some skepticism from observers who worry the AI frenzy may have created a financial bubble, posing a risk to investors and echoing the build up and subsequent crash of the late 1990s dotcom boom.