- OpenAI intends to buy artificial intelligence chips from Alphabet’s Google, according to a person familiar with the matter, as part of the ChatGPT maker’s effort to add computing power quickly. Final terms of any deal are not yet known, and OpenAI and Google declined to comment.
- OpenAI already plans to start using its own chips later this year. Its in-house Jalapeño chips, developed with Broadcom, were created with help from Google veterans, including Richard Ho, who runs OpenAI’s chip team and previously worked on Google’s tensor processing units.
- Google began building TPUs more than a decade ago to speed up its search engine, and they have emerged as an alternative to Nvidia’s graphics processing units. Oracle also said on Tuesday that TPUs would be available through its cloud, and CNBC reported that Oracle Cloud Infrastructure will add Google TPUs, OpenAI’s Jalapeño chip and Cerebras hardware.
- The news lands on the day Alphabet reports earnings after the bell, with the stock off 21% from its May high. Oracle rallied 3.6% on Tuesday as it moved to integrate ChatGPT and Codex into its apps and expand its cloud chip lineup, but it is still down 33% this year and about 54% over 12 months.
What Happened?
Bloomberg reported that OpenAI intends to purchase Google’s AI chips, confirming an earlier report by The Information. The move is part of OpenAI’s multipronged push to secure processing power, alongside its own Jalapeño chips. Separately, Oracle announced that TPUs would be offered through its cloud. “The next generation of AI will require a diverse range of compute,” Google executive Amin Vahdat said in a statement announcing that deal. Oracle is also adding ChatGPT and Codex to its application stack, CNBC reported.
Why It Matters?
A deal would make Google a chip supplier to one of its biggest AI rivals, a sign that TPUs are becoming a commercial product rather than an internal tool. For Nvidia, it adds to a growing list of alternatives as AI developers, including OpenAI, design their own chips or buy from multiple vendors. For Alphabet investors, external TPU sales could become a new revenue stream for Google Cloud, and Broadcom, which helped develop OpenAI’s Jalapeño chips, also benefits from the shift toward custom silicon.
What’s Next?
Alphabet’s earnings call after Wednesday’s close is the next chance for management to address TPU demand and any external customer deals. Investors will watch for details on the size and terms of an OpenAI agreement, which are not yet known. Oracle’s AI World conference and cloud updates will show how quickly TPUs and other non-Nvidia chips are being adopted by customers.
