Reuters & Bloomberg: OpenAI to design “inference AI” chip with Broadcom and TSMC
Bloomberg reports that OpenAI, the fast-growing company behind ChatGPT, is working with Broadcom Inc. to develop a new artificial intelligence chip specifically focused on running AI models after they’ve been trained, according to two people familiar with the matter. The two companies are also consulting with Taiwan Semiconductor Manufacturing Company(TSMC) the world’s largest chip contract manufacturer. OpenAI has been planning a custom chip and working on its uses for the technology for around a year, the people said, but the discussions are still at an early stage. The company has assembled a chip design team of about 20 people, led by top engineers who have previously built Tensor Processing Units (TPUs) at Google, including Thomas Norrie and Richard Ho (head of hardware engineering).
Reuters reported on OpenAI’s ongoing talks with Broadcom and TSMC on Tuesday. It has been working for months with Broadcom to build its first AI chip focusing on inference (responds to user requests), according to sources. Demand right now is greater for training chips, but analysts have predicted the need for inference chips could surpass them as more AI applications are deployed.
OpenAI has examined a range of options to diversify chip supply and reduce costs. OpenAI considered building everything in-house and raising capital for an expensive plan to build a network of chip manufacturing factories known as “foundries.”
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OpenAI may continue to research setting up its own network of foundries, or chip factories, one of the people said, but the startup has realized that working with partners on custom chips is a quicker, attainable path for now. Reuters earlier reported that OpenAI was pulling back from the effort of establishing its own chip manufacturing capacity. The company has dropped the ambitious foundry plans for now due to the costs and time needed to build a network, and plans instead to focus on in-house chip design efforts, according to sources.
OpenAI, which helped commercialize generative AI that produces human-like responses to queries, relies on substantial computing power to train and run its systems. As one of the largest purchasers of Nvidia’s graphics processing units (GPUs), OpenAI uses AI chips both to train models where the AI learns from data and for inference, applying AI to make predictions or decisions based on new information. Reuters previously reported on OpenAI’s chip design endeavors. The Information reported on talks with Broadcom and others.
The Information reported in June that Broadcom had discussed making an AI chip for OpenAI. As one of the largest buyers of chips, OpenAI’s decision to source from a diverse array of chipmakers while developing its customized chip could have broader tech sector implications.
Broadcom is the largest designer of application-specific integrated circuits (ASICs) — chips designed to fit a single purpose specified by the customer. The company’s biggest customer in this area is Alphabet Inc.’s Google. Broadcom also works with Meta Platforms Inc. and TikTok owner ByteDance Ltd.
When asked last month whether he has new customers for the business, given the huge demand for AI training, Broadcom Chief Executive Officer Hock Tan said that he will only add to his short list of customers when projects hit volume shipments. “It’s not an easy product to deploy for any customer, and so we do not consider proof of concepts as production volume,” he said during an earnings conference call.
OpenAI’s services require massive amounts of computing power to develop and run — with much of that coming from Nvidia chips. To meet the demand, the industry has been scrambling to find alternatives to Nvidia. That’s included embracing processors from Advanced Micro Devices Inc. and developing in-house versions.
OpenAI is also actively planning investments and partnerships in data centers, the eventual home for such AI chips. The startup’s leadership has pitched the U.S. government on the need for more massive data centers and CEO Sam Altman has sounded out global investors, including some in the Middle East, to finance the effort.
“It’s definitely a stretch,” OpenAI Chief Financial Officer Sarah Friar told Bloomberg Television on Monday. “Stretch from a capital perspective but also my own learning. Frankly we are all learning in this space: Infrastructure is destiny.”
Currently, Nvidia’s GPUs hold over 80% AI market share. But shortages and rising costs have led major customers like Microsoft, Meta, and now OpenAI, to explore in-house or external alternatives.
References:
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In September, Intel announced it had entered into an agreement to build custom chips for Amazon Web Services (AMZN). Microsoft (MSFT) also previously entered into an agreement for Intel to build its custom chips. But the company will need to add a slew of additional customers to ensure its foundry business is a success.
Intel’s Foundry services have run into trouble before. According to a separate Reuters report, Broadcom was evaluating using Intel’s manufacturing processes for its own chips, but test runs of the semiconductors fell short.
The Santa Clara, Calif.-based company lost 46 cents a share on sales of $13.28 billion in the September quarter. Analysts polled by FactSet had expected Intel to lose 2 cents a share on sales of $13.02 billion. In the year-earlier period, Intel earned 41 cents a share on sales of $14.16 billion.
For the current quarter, Intel forecast adjusted earnings of 12 cents a share on sales of $13.8 billion. That’s based on the midpoint of its outlook. Analysts were modeling earnings of 8 cents a share on sales of $13.66 billion. In the year-earlier period, Intel earned 54 cents a share on sales of $15.41 billion.
Intel Chief Executive Pat Gelsinger said the company is making significant progress on its plan to cuts costs.
“Our Q3 results underscore the solid progress we are making against the plan we outlined last quarter to reduce costs, simplify our portfolio and improve organizational efficiency,” Gelsinger said in a news release. Intel is “acting with urgency to position the business for sustainable value creation moving forward,” he said.
Meanwhile, Intel is considering sale of its Network Division with Ericsson a likely buyer
Broadcom said it expects 65% growth in AI product sales this quarter and that the potential market for AI components that it designs for data centers may reach $90 billion by fiscal 2027.
Broadcom is designing an AI server processor for Apple. It already makes custom AI server chips for Alphabet’s (GOOGL) Google, Facebook parent Meta Platforms (META) and TikTok owner ByteDance. It also is making an AI inference chip for ChatGPT creator OpenAI.