OpenAI Partners with Broadcom and TSMC for Custom AI Chip Development

Broadcom Gains on Report That It's Working With OpenAI

Broadcom Inc. shares gained as much as 4% after Reuters reported that OpenAI is working with the company on a new artificial intelligence chip. OpenAI is using Broadcom and contract manufacturer Taiwan Semiconductor Manufacturing Co. to build an in-house processor that can help handle its burgeoning AI demands, according to Reuters, which cited unidentified people familiar with the project.

Why Broadcom Stock Is Gaining Today | The Motley Fool

Reuters published a report today stating that OpenAI is working on a new in-house AI chip. Broadcom is assisting with the design of the chip, and Taiwan Semiconductor Manufacturing is also involved in the process. OpenAI is at the forefront of the generative AI trend. The company is responsible for services including ChatGPT, Dall-E, and Sora, and its technologies have relied on hardware from Nvidia and other advanced semiconductor providers. OpenAI is aiming to dramatically expand its capabilities and operations, so it's looking to reduce its dependence on third-party hardware. That could create some opportunities for Broadcom in the near term. Based on the report from Reuters, the chip that OpenAI is designing with Broadcom's help probably isn't being positioned to replace Nvidia's advanced graphics processing units (GPUs). Nvidia's GPUs have been the preferred hardware for the training of artificial intelligence models. Meanwhile, the new chip from OpenAI is being tailored for less computationally intensive AI inference applications. While it's not clear how much of a sales windfall Broadcom might record from helping OpenAI develop its first in-house AI chip, it's a bullish sign for the chip company that it was selected by the AI-software leader for the project. Broadcom stock has rallied roughly 60% year to date, and AI-related business tailwinds and excitement surrounding future opportunities in the space have played a big role in the company's valuation gains.

OpenAI Chooses Broadcom For AI Interface Chip Development - Microsoft (NASDAQ:MSFT), Broadcom (NASDAQ:AVGO), Advanced Micro Devices (NASDAQ:AMD), Taiwan Semiconductor (NYSE:TSM)

AMD added as supplier to address surging AI demand for OpenAI. OpenAI has partnered with Broadcom Inc AVGO and Taiwan Semiconductor Manufacturing Co TSM to build this in-house chip. The ChatGPT parent added Advanced Micro Devices Inc AMD as a chip supplier to better address artificial intelligence demands. Broadcom, AMD, and Taiwan Semiconductor's stocks gained after the report. Also Read: Intel Partners With AMD To Counter Arm's Rising Dominance in Computing OpenAI is ramping up efforts to produce its chip designed to power advanced AI systems, Reuters reports. OpenAI's move reflects its plans to seek alternatives to manage costs better and reduce dependency on existing suppliers like Nvidia Corp NVDA. Broadcom has been working closely with OpenAI to develop this chip, which primarily focuses on "inference" -- applying AI models to make decisions based on new data. As demand for inference chips grows, OpenAI's custom-built chip could eventually support more applications, complementing its reliance on training chips provided by Nvidia. Securing access to manufacturing capacity with Taiwan Semiconductor has been part of the process. Sources indicate OpenAI plans to produce its first custom-designed chip by 2026. Another notable development is collaboration with AMD. Through Microsoft Corp MSFT Azure, OpenAI will utilize AMD's MI300X chips. Recent analyst takes on Broadcom and AMD JPMorgan analyst Harlan Sur highlights semiconductors as a top investment area for 2024, predicting a solid up-cycle after 2023's sector bottom. Sur noted Broadcom and Marvell Technology Inc MRVL as critical players poised for growth, especially in cloud infrastructure and custom AI chips. Goldman Sachs analysts, led by Toshiya Hari, underscored the sustained expansion of AI infrastructure spending across industries as a driving force behind their bullish take on AMD. Hari flagged increased capital investments from large enterprises engaged in an "AI arms race." Price Actions: At the last check on Tuesday, AVGO stock was up 3.84% to $176.62. AMD is up 3.48%, and TSM is up 1.51%. Also Read: Trump Goes After Taiwan Semiconductor On Joe Rogan Podcast Photo courtesy: Shutterstock This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs