Advanced Micro Devices Inc (AMD) yesterday signed a deal with OpenAI for artificial intelligence (AI) infrastructure that could generate tens of billions of dollars in new revenue.
The two signed a definitive agreement for OpenAI to deploy 6 gigawatts of AMD graphics processing units (GPUs) over multiple years, the companies said in a statement.
AMD has given OpenAI a warrant for as many as 160 million shares which will vest as milestones are achieved. Those targets require AMD’s stock price to continue to increase in value and future exercise points include a tranche tied to a share price of US$600. AMD shares closed Friday at US$164.67.
Photo: Justin Sullivan and Jack Guez, AFP
The agreement is the latest huge data center deal for OpenAI as the AI start-up builds out more computing capacity — an unprecedented bet by the technology industry that runaway demand for power-hungry AI tools will continue unabated.
Last month, Nvidia Corp said it would invest as much as US$100 billion in OpenAI to build AI infrastructure and new data centers with a capacity of at least 10 gigawatts of power, equal to the peak electricity demand of New York City.
It’s unclear how exactly OpenAI will finance the enormous costs associated with the chips and data centers needed to build and run more advanced AI systems. Two months ago, OpenAI chief executive officer Sam Altman said he wants to spend “trillions” on infrastructure to secure the computing resources he thinks the company needs for AI services. To bankroll that, Altman said his company is working to devise a “new kind” of financial instrument, without providing details.
Concerns over an AI bubble that could rival the dot-com craze of the late 1990s, which ended in a spectacular crash and a wave of bankruptcies, have grown as multibillion-dollar AI chip and data center deals proliferate globally. The financing is coming from venture capital, debt and, lately, some more unconventional arrangements that have raised eyebrows on Wall Street.
For AMD, the deal keeps its technology in the mix as OpenAI and other owners of large-scale data centers funnel billions toward expanding AI capacity. The chipmaker remains a distant second to Nvidia in the market for so-called accelerator chips.
AMD, whose AI GPU revenue is projected to reach US$6.55 billion this year, sees the tie up with OpenAI as lucrative beginning next year and accelerating in 2027. It’s also going to provide a springboard to greater adoption of its technology that could take its revenue from the area to above US$100 billion, executives said, without specifying a time frame.
“Our partnership with OpenAI is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI’s AI infrastructure buildout,” AMD chief financial officer Jean Hu (胡錦) said in a statement. “This agreement creates significant strategic alignment,” she said, adding that it would boost AMD’s earnings per share.
AMD CEO Lisa Su (蘇姿丰) said the company was “thrilled to partner with OpenAI to deliver AI compute at massive scale.” Altman called the partnership “a major step in building the compute capacity needed to realize AI’s full potential,” adding that AMD’s “leadership in high-performance chips” would help OpenAI bring its technology to more people faster.
For the start-up, the commitment to AMD may help foster a more robust alternative to the ubiquity of Nvidia’s technology. OpenAI and data center operators spend a huge portion of their infrastructure budgets on technology from that company. Nvidia’s data center division alone has more revenue than any other chipmaker has in total. In its latest financial year, the unit more than doubled to US$115 billion in sales and is on course to show similar growth in the current period.
AMD and OpenAI said the first tranche of warrants will vest when the first gigawatt of computing is deployed, a build which will start in the second half of next year. Those computers will be based on AMD Instinct MI450 chips. Additional portions will vest as further hardware is put in place.
In addition, “vesting is further tied to AMD achieving certain share-price targets and to OpenAI achieving the technical and commercial milestones required to enable AMD deployments at scale,” the release said.
RUN IT BACK: A succesful first project working with hyperscalers to design chips encouraged MediaTek to start a second project, aiming to hit stride in 2028 MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it is engaging a second hyperscaler to help design artificial intelligence (AI) accelerators used in data centers following a similar project expected to generate revenue streams soon. The first AI accelerator project is to bring in US$1 billion revenue next year and several billion US dollars more in 2027, MediaTek chief executive officer Rick Tsai (蔡力行) told a virtual investor conference yesterday. The second AI accelerator project is expected to contribute to revenue beginning in 2028, Tsai said. MediaTek yesterday raised its revenue forecast for the global AI accelerator used
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has secured three construction permits for its plan to build a state-of-the-art A14 wafer fab in Taichung, and is likely to start construction soon, the Central Taiwan Science Park Bureau said yesterday. Speaking with CNA, Wang Chun-chieh (王俊傑), deputy director general of the science park bureau, said the world’s largest contract chipmaker has received three construction permits — one to build a fab to roll out sophisticated chips, another to build a central utility plant to provide water and electricity for the facility and the other to build three office buildings. With the three permits, TSMC
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
RSS