In a bid to overcome the scarcity of vital graphics processing units (GPUs) crucial for running artificial intelligence (AI) applications, OpenAI, the brains behind ChatGPT, is contemplating the development of its own AI chips. Internal discussions have been ongoing for over a year, exploring various strategies to resolve the shortage issue, including potential acquisitions. While OpenAI has not yet made a final decision, this move aligns with CEO Sam Altman's commitment to addressing the challenges posed by the limited availability of high-performance processors.
The Quest for More AI Chips
Sam Altman has been vocal about the critical need for more AI chips, citing concerns over both the shortage of advanced processors powering OpenAI's software and the exorbitant costs associated with sustaining the hardware required for its operations. The current dependence on Nvidia, which controls over 80% of the global GPU market, has prompted OpenAI to seek alternative solutions. This pursuit includes evaluating the feasibility of manufacturing its own AI chips, collaborating more closely with chipmakers like Nvidia, and diversifying its supplier base beyond Nvidia.
Running ChatGPT, OpenAI's advanced generative AI technology, is an expensive venture. Each query incurs a cost of approximately 4 cents, according to analyst Stacy Rasgon. If the scale of ChatGPT queries were to reach a fraction of Google's search volume, OpenAI would face staggering expenses—initially requiring around $48.1 billion worth of GPUs and an annual expenditure of about $16 billion on chips to maintain operations.
Custom Chips: A Strategic Move
If OpenAI proceeds with developing its custom AI chips, it would join the ranks of major tech players like Google and Amazon, who have previously embarked on similar journeys. However, this strategic initiative involves substantial investments, potentially amounting to hundreds of millions of dollars annually. The decision to build custom chips is not without risks, and success is far from guaranteed, even with dedicated resources.
To expedite the development of its own chip, OpenAI has explored the possibility of acquiring an existing chip company. Drawing parallels with Amazon's acquisition of Annapurna Labs in 2015, such a move could streamline the process. While OpenAI performed due diligence on a potential acquisition target, the identity of the company remains undisclosed.
Building custom chips is a complex task, and even if OpenAI commits to this venture, it will likely take several years to materialize. During this time, the company may continue to rely on commercial providers like Nvidia and Advanced Micro Devices. Other tech giants, such as Meta, have faced challenges in their custom chip efforts, highlighting the intricate nature of developing and integrating proprietary hardware.
Industry Dynamics and Microsoft's Role
The surge in demand for specialized AI chips, triggered by the launch of ChatGPT, reflects the broader trend in the tech industry. Nvidia's dominance in producing viable AI chips has intensified the urgency for alternatives. Notably, Microsoft, a key supporter of OpenAI, is also working on a custom AI chip that is currently being tested. This move could signify a potential shift or distancing between the two technology giants.
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