OpenAI looking to make its own AI chips

The parent company for ChatGPT, OpenAI is looking at making own artificial intelligence chips and has gone as far as evaluating a potential acquisition target, according to people familiar with the company’s plans.

According to reports by Reuters, the company has not yet decided to move ahead, even though it is said that since at least last year it discussed various options to solve the shortage of expensive AI chips that OpenAI relies on. Included on the options are building its own AI chip, working more closely with other chip makers including Nvidia and also diversifying its suppliers beyond Nvidia.

Sam Altman, who is the CEO of the company, has made the acquisition of more AI chips a top priority for the company. He has publicly complained about the scarcity of graphics processing units, a market dominated by Nvidia, which controls more than 80% of the global market for the chips best suited to run AI applications.

Altman has identified two major concerns that are the drive behind wanting to get more chips, which are; a shortage of the advanced processors that power OpenAI’s software and the “eye-watering” costs associated with running the hardware necessary to power its efforts and products.

OpenAI has developed its generative AI technologies on a massive supercomputer constructed by Microsoft, one of its largest backers, that uses 10 000 of Nvidia’s GPUs since the year 2020.

Running ChatGPT is very expensive for the company. Each query costs roughly US$0.04, according to an analysis from Bernstein analyst Stacy Rasgon. If ChatGPT queries grow to a tenth the scale of Google Search, it would require roughly $48.1-billion worth of GPUs initially and about $16-billion worth of chips a year to keep operational.

Developing its AI chips would put OpenAI among a small group of large tech companies such as Google and Amazon.com that have sought to take control over designing the chips that are very important to their businesses.

There is no clarity yet in terms of whether or not OpenAI will move ahead with a plan to build a custom chip. Doing so would be a major strategic initiative and a heavy investment that could amount to hundreds of millions of dollars a year in costs, according to industry veterans. Even if OpenAI committed resources to the task it would not guarantee success.