OpenAI partners with Broadcom to develop its first AI processors, aiming to meet growing demand for its services. Broadcom shares rise over 10%. The chips will produce 10 gigawatts of power, equivalent to the needs of 8 million U.S. households. The deal is not expected to challenge Nvidia’s dominance in the AI accelerator market.

This partnership is part of a trend of tech companies investing in custom AI chips for advanced systems. OpenAI recently secured a 6-gigawatt chip supply deal with AMD and a $100 billion investment from Nvidia. The financial details of the Broadcom deal were not disclosed, but OpenAI is well-positioned to raise funds.

The 2026 timeline for the chip build-out is aggressive, but OpenAI is confident in securing the necessary funding. The financing may involve funding rounds, pre-orders, strategic investments, support from Microsoft, and leveraging future revenue streams. The tie-up with Broadcom places OpenAI alongside industry giants like Google and Amazon in custom chip development.

Broadcom has become a major player in the generative AI boom, with its stock price surging nearly six-fold since 2022. They recently unveiled a $10 billion custom AI chip order, sparking speculation that it was for OpenAI. However, a company executive clarified that OpenAI was not the unnamed client. The new custom chips will be fully deployed by the end of 2029, utilizing Broadcom’s networking gear.

Read more at Yahoo Finance: OpenAI taps Broadcom to build its first AI processor in latest chip deal