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OpenAI Considers Developing Custom AI Chips Amid Shortage Concerns

OpenAI is contemplating the development of its own artificial intelligence chips, including the evaluation of potential acquisition targets, to address the shortage of expensive AI chips. While no final decision has been made, the company has been exploring various options, including building its own AI chips and diversifying suppliers beyond Nvidia, in response to CEO Sam Altman's priority to acquire more AI chips. The scarcity of graphics processing units (GPUs), dominated by Nvidia, poses a significant challenge, with running ChatGPT incurring high costs for the company.

Efforts to secure more chips align with Altman's concerns about a shortage of advanced processors and the substantial costs associated with powering OpenAI's projects. The company currently relies on a supercomputer constructed by Microsoft, using 10,000 Nvidia GPUs, for its generative AI technologies. Developing custom AI chips would place OpenAI among tech giants like Google and Amazon, although it remains uncertain whether OpenAI will proceed with this initiative due to the substantial investment and challenges involved. An acquisition of a chip company may expedite the process, similar to Amazon's acquisition of Annapurna Labs in 2015.

Even if OpenAI opts for custom chips, it could take several years to realize, leaving the company dependent on commercial providers like Nvidia and Advanced Micro Devices (AMD) in the interim. Several tech companies have ventured into developing their own processors, with varying degrees of success. Demand for specialized AI chips has surged since the launch of ChatGPT, highlighting the importance of addressing chip shortages in the AI industry.

Microsoft, OpenAI's primary backer, is also working on a custom AI chip that OpenAI is testing, signaling potential shifts in their collaboration. Overall, OpenAI's exploration of custom AI chips reflects the evolving landscape of AI hardware and the strategic decisions made by tech giants in this domain.