Microsoft (MSFT)-backed OpenAI Considers Making Own AI Chips, Evaluates Potential Acquisition Targets

According to Reuters, CEO of OpenAI Sam Altman mentioned in one of his latest public appearances the acquisition of more AI chips a top priority for the company. He voiced concern about the persisting scarcity of graphics processing units (GPUs), where NVidia (NVDA), which controls > 80% of the global market for the chips best suited to run AI applications, dominates the markets. Since 2020, OpenAI has developed its generative artificial intelligence technologies on a massive supercomputer constructed by Microsoft, one of its largest backers, that uses 10,000 of NVidia's graphics processing units.

The ChatGPT developers, however, have not yet decided to move forward. Nevertheless, the report extends itself to saying that the company has been exploring options since at least last year to address a shortage of the expensive artificial intelligence chips it relies on. Those options include making its own AI chips, working more closely with other chipmakers like NVidia and diversifying its suppliers beyond Nvidia.

Running ChatGPT is expensive. The cost per query is about 4 cents. If ChatGPT search volume grew to even 1/10th of Google search volume, it would initially require approximately $48.1 billion worth of GPUs and nearly $16 billion in chips per year to keep it running. If Microsoft backs the initiative, it may lead to a significant appreciation of its currently misdirected stock.