OpenAI has signed a multibillion-dollar deal with Broadcom to develop and deploy 10 gigawatts of custom AI chips and computing systems over the next four years. This high-profile partnership is aimed at fulfilling OpenAI’s immense computing requirements.
OpenAI is now planning to design its own graphics processing units, or GPUs, to integrate powerful artificial intelligence models into the hardware for future systems.
According to the announced agreement, the chips will be co-developed by OpenAI and Broadcom and deployed by the chip company starting in the second half of 2026. They will roll out 10 gigawatts' worth of custom chips, whose power consumption is roughly equivalent to the needs of more than 8 million US households or five times the electricity produced by the Hoover Dam.
"Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI's potential," OpenAI CEO Sam Altman said in a statement.
“Broadcom’s collaboration with OpenAI signifies a pivotal moment in the pursuit of artificial general intelligence,” said Hock Tan, President and CEO of Broadcom. “OpenAI has been at the forefront of the AI revolution since the ChatGPT moment, and we are thrilled to co-develop and deploy 10 gigawatts of next-generation accelerators and network systems to pave the way for the future of AI,” he added.
“Our collaboration with Broadcom will power breakthroughs in AI and bring the technology’s full potential closer to reality,” said OpenAI co-founder and President Greg Brockman. “By building our own chip, we can embed what we’ve learned from creating frontier models and products directly into the hardware, unlocking new levels of capability and intelligence,” added Brockman.
Broadcom (AVGO), long known for its networking hardware, reinvented itself in the generative AI market with the rise of custom chips. AVGO stock price has increased nearly sixfold since the end of 2022. The company unveiled a $10 billion custom AI chip order in September from an unnamed new customer that some analysts and market watchers speculated was OpenAI.
The new systems will be scaled entirely using Broadcom's Ethernet and other networking gear, giving the company an advantage over rivals such as Marvell Technology. This deal also challenges Nvidia's InfiniBand networking solution.
The OpenAI-Broadcom deal positions the tech giant among the ranks of cloud-computing pioneers such as Google and Amazon.com. These companies are also developing custom chips to meet the rising demand for AI and reduce dependence on Nvidia's costly processors.
However, both Microsoft and Meta have faced multiple delays and even failed to match the performance of Nvidia chips.
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In the last week, OpenAI unveiled a 6-gigawatt AI chip supply deal with AMD, which includes an option to purchase a stake in the chipmaker. On Sept. 22, OpenAI signed a deal with Nvidia for 10 gigawatts of AI processors.
On the stock market today, Broadcom stock advanced 9.9% to close at 356.70 after the announcement of the OpenAI deal.
"We think the current wave of AI capex and AI funding headlines is largely driven by OpenAI, which is also driving investor circularity concerns, especially with overlapping neocloud and in-house partnerships," Mizuho Securities analyst Vijay Rakesh said.
According to reports, OpenAI is on track to spend at least $700 billion on AI computing infrastructure by 2030. The latest deals highlighted the rising appetite of tech giants for computing power as they race to build systems that meet or surpass human intelligence.