ChatGPT-owner OpenAI is exploring designing AI chips through acquisition or working closely with Nvidia

OpenAI, the organization responsible for creating ChatGPT, is considering the production of its own artificial intelligence (AI) chips. They have even gone as far as evaluating a potential company to acquire to aid in this endeavor. However, a final decision has not been made. Since last year, they have been discussing various solutions to their shortage of expensive AI chips, which are crucial for their operations. These discussions have included the possibility of manufacturing their own AI chips, collaborating more closely with other chip manufacturers like Nvidia, and diversifying their suppliers beyond Nvidia. OpenAI's CEO, Sam Altman, has prioritized the acquisition of more AI chips for the company. He has publicly expressed his concerns about the scarcity of graphics processing units (GPUs), a market largely dominated by Nvidia. Altman's concerns revolve around two main issues: the shortage of advanced processors that power OpenAI's software and the high costs associated with running the hardware necessary for their efforts and products. Since 2020, OpenAI has been developing its generative artificial intelligence technologies on a massive supercomputer constructed by Microsoft, one of its largest backers. This supercomputer utilizes 10,000 of Nvidia's GPUs. Operating ChatGPT is a costly endeavor for the company. Each query costs approximately 4 US cents. If the usage of ChatGPT were to reach a tenth of the scale of Google search, it would initially require roughly $48. 1 billion worth of GPUs and about $16 billion worth of chips annually to maintain operations. If OpenAI were to proceed with the development of its own AI chips, it would join a small group of large tech companies such as Google and Amazon that have sought to take control over the design of the chips that are fundamental to their businesses. However, it remains unclear whether OpenAI will proceed with this plan. Doing so would be a significant strategic initiative and a heavy investment that could amount to hundreds of millions of dollars a year in costs. Even if OpenAI committed resources to this task, success is not guaranteed. Acquiring a chip company could expedite the process of building OpenAI's own chip. OpenAI had considered this path to the point where it performed due diligence on a potential acquisition target. The identity of the company OpenAI examined for purchase remains unknown. Even if OpenAI proceeds with plans for a custom chip, including an acquisition, the effort is likely to take several years. This leaves the company dependent on commercial providers like Nvidia and Advanced Micro Devices in the meantime. Some big tech companies have been building their own processors for years with limited results. Microsoft, OpenAI's main backer, is also developing a custom AI chip that OpenAI is testing. This could indicate a further distancing between the two companies. The demand for specialized AI chips has skyrocketed since the launch of ChatGPT last year. Nvidia is one of the few chip manufacturers that produces useful AI chips and dominates the market.