Advanced Micro Devices (AMD) and OpenAI have announced a multi-year partnership to develop artificial intelligence (AI) data centers, with the chipmaker anticipating the generation of tens of billions of dollars in new revenue over the next five years. This collaboration is expected to significantly boost AMD’s revenue, driven by the delivery of six gigawatts worth of chips to OpenAI, the company behind the popular ChatGPT platform.
The news of the agreement led to a surge in AMD’s share price, with an increase of more than 30% before markets opened. According to the joint statement, AMD will supply OpenAI with graphics processing units (GPUs), which are essential for the development of artificial intelligence. This partnership highlights OpenAI’s efforts to diversify its supply of semiconductors, reducing its dependence on Nvidia, a US-based powerhouse in the industry.
In recent months, Nvidia and OpenAI signed a contract worth over $100 billion for equipment intended to enhance OpenAI’s generative AI capabilities. AMD, however, faces competition not only from Nvidia but also from other major players, including China’s Huawei, as well as Amazon and Google. The deal between AMD and OpenAI includes the issuance of 160 million “warrants” to OpenAI, a financial product that can be converted to shares under specific conditions.
The partnership between AMD and OpenAI underscores the growing importance of AI in the technology sector. As companies continue to invest heavily in AI development, the demand for specialized hardware, such as GPUs, is increasing. This collaboration is expected to play a significant role in shaping the future of AI, with AMD’s GPUs enabling OpenAI to further develop its AI capabilities.
The agreement also marks a significant milestone for AMD, as it seeks to expand its presence in the AI market. With the anticipated revenue generation from this partnership, AMD is poised to strengthen its position in the industry. As the technology sector continues to evolve, this partnership is likely to have a lasting impact on the development of AI and the companies involved.