OpenAI Partners with AMD for Strategic Chip Deal

OpenAI and Advanced Micro Devices (AMD) have struck a significant agreement allowing OpenAI to acquire a 10% stake in AMD. This deal comes on the heels of OpenAI’s recent large-scale partnership with Nvidia, a major player in the AI chip market.

In a report by CNBC, the collaboration announced on Monday resulted in a notable 28% increase in AMD’s shares during morning trading. According to the terms, OpenAI plans to utilize 6 Gigawatts of AMD’s Instinct Graphics Processing Units (GPUs) over several years and hardware generations, starting with an initial deployment of 1 gigawatt in the latter half of 2026.

As part of this arrangement, AMD has issued a warrant for OpenAI, which could allow them to acquire up to 160 million shares of AMD common stock. The vesting of these shares ties back to both the volume of chips deployed and milestones related to AMD’s stock price. The first issuance will coincide with the initial full gigawatt deployment, with further shares becoming accessible as OpenAI meets critical benchmarks for scaling up to 6 gigawatts.

If OpenAI decides to exercise the full warrant, it could end up owning around 10% of AMD, based on the current outstanding shares. The total value of the transaction hasn’t been disclosed but is estimated to be in the billions.

Sam Altman, CEO of OpenAI, expressed optimism about the partnership, highlighting AMD’s advancements in high-performance chips, which, he believes, will accelerate progress in making advanced AI more widely accessible. This partnership establishes AMD as a key strategic ally for OpenAI and signifies one of the industry’s largest GPU deployment agreements to date.

This collaboration is anticipated to alleviate some of the supply chain pressures affecting the industry and lessen OpenAI’s dependence on a single supplier. However, it may create friction with Nvidia, especially given OpenAI’s previous arrangement involving a substantial $100 billion investment from Nvidia.

In a recent announcement, Nvidia revealed plans to invest an astonishing $100 billion into OpenAI, the company behind ChatGPT, which has significantly impacted the global chip market. Jensen Huang, Nvidia’s CEO, claimed that the agreement is unprecedented, with OpenAI aiming to create and implement NVIDIA systems that will require 10 gigawatts of power—akin to the capabilities of 40 to 50 million GPUs. Nvidia described this deal as “the biggest AI infrastructure deployment in history.”

After the news of the OpenAI-AMD partnership broke, Nvidia’s stock dipped by over 1% on Monday morning. OpenAI is also reportedly in discussions with Broadcom to develop custom chips for future models.

For AMD, these partnerships mark a commercial milestone, affirming the future of their instinct roadmap. AMD has garnered notable clients amidst the ongoing AI acceleration and has been positioned as a competitive force against Nvidia in the AI accelerator market. CEO Lisa Su stated that this deal represents “a truly promising partnership that will enable the most ambitious AI implementations worldwide and propel the entire AI ecosystem forward.”