Broadcom Demands Microsoft Buy 40% of OpenAI Custom Chips
Broadcom Inc. is withholding production of a custom AI chip for OpenAI unless Microsoft Corp. commits to buying 40 percent of the output, The Decoder reported.
The condition has drawn criticism from within OpenAI. Sachin Katti, the company’s infrastructure chief, called the dependency on Microsoft’s commitment “financially unattractive,” according to the report. Microsoft has not yet agreed to the terms.
The first phase of OpenAI’s custom chip project carries an estimated price tag of $18 billion. Broadcom’s insistence on a guaranteed buyer for nearly half the production run reflects the chipmaker’s effort to mitigate the financial risk of such a large project.
The standoff highlights the complex dynamics of the OpenAI-Microsoft partnership, which has been central to OpenAI’s growth. Microsoft has invested more than $13 billion in OpenAI and serves as its primary cloud computing provider through Azure. But the Broadcom deal would require Microsoft to make a separate, substantial hardware commitment on top of its existing investment.
Custom AI chips have become a strategic priority for major AI companies seeking to reduce their dependence on Nvidia Corp., which dominates the market for graphics processing units used to train and run large language models. Google has developed its own Tensor Processing Units, and Amazon Web Services has built its Trainium and Inferentia chips for similar reasons.
For OpenAI, a custom chip could provide performance optimizations tailored to its specific model architectures while potentially lowering long-term compute costs. But the Broadcom requirement effectively makes the project contingent on Microsoft’s willingness to absorb a large share of the production — a condition that Katti’s comments suggest OpenAI finds unacceptable in its current form.
The impasse comes as AI companies face increasing scrutiny over their infrastructure spending. OpenAI has been seeking to raise additional capital and recently restructured its corporate governance, moves aimed in part at supporting the compute investments required to develop frontier AI systems.
Neither Broadcom, OpenAI, nor Microsoft immediately responded to requests for comment on the report.
