SAN FRANCISCO/WASHINGTON, Oct 5 (Portal) – OpenAI, the company behind ChatGPT, is considering making its own artificial intelligence chips and has even gone so far as to evaluate a potential acquisition target, people familiar with the company’s plans say are.
According to recent internal discussions reported by Portal, the company has not yet decided to take another step. But various options have been discussed since at least last year to address the shortage of expensive AI chips that OpenAI relies on, according to people familiar with the matter.
Those options included building its own AI chip, working more closely with other chipmakers including Nvidia, and diversifying its suppliers beyond Nvidia (NVDA.O).
OpenAI declined to comment.
CEO Sam Altman has made purchasing more AI chips a top priority for the company. He has complained publicly about the shortage of graphics processing units, a market dominated by Nvidia, which controls more than 80% of the global market for the chips best suited to running AI applications.
The effort to get more chips is tied to two main problems Altman identified: a lack of advanced processors that power OpenAI’s software and the “staggering” costs associated with running the hardware needed for it the operation of its efforts and products is required.
As of 2020, OpenAI has been developing its generative artificial intelligence technologies on a massive supercomputer built by Microsoft, one of its biggest backers, that uses 10,000 graphics processing units (GPUs) from Nvidia.
ChatGPT is very costly for the company to operate. According to an analysis by Bernstein analyst Stacy Rasgon, each query costs about 4 cents. If ChatGPT queries grow to a tenth of Google searches, it would initially require about $48.1 billion worth of GPUs and about $16 billion worth of chips per year to remain operational.
CUSTOM CHIPS ERA
In this illustration from February 21, 2023, a keyboard is placed in front of a displayed OpenAI logo. Portal/Dado Ruvic/Illustration/File Photo Acquire License Rights
Attempting to develop its own AI chips would place OpenAI among a small group of large technology companies such as Alphabet’s Google (GOOGL.O) and Amazon.com (AMZN.O) that have sought to take control of the development of the basic chips take over to their companies.
It’s not clear whether OpenAI will move forward with its plan to build a custom chip. According to industry veterans, this would be a major strategic initiative and a large investment that could run into hundreds of millions of dollars per year. Even if OpenAI committed resources to the task, it would not be a guarantee of success.
An acquisition of a chip company could speed up the process of developing OpenAI’s own chip – as was the case with Amazon.com and its acquisition of Annapurna Labs in 2015.
OpenAI has been considering the route to the point where it is conducting due diligence on a potential acquisition target, according to one of the people familiar with its plans.
The identity of the company investigated by OpenAI could not be determined.
Even if OpenAI moves forward with its plans for a custom chip – including an acquisition – the effort is likely to take several years, leaving the company dependent on commercial suppliers such as Nvidia and Advanced Micro Devices (AMD.O) in the meantime.
Some big tech companies have been building their own processors for years with limited results. According to a Portal report, Meta’s (META.O) custom chip efforts have been plagued with problems, leading the company to scrap some of its AI chips. The Facebook owner is currently working on a newer chip that will cover all types of AI work.
OpenAI’s main backer, Microsoft (MSFT.O), is also developing a custom AI chip that OpenAI is testing, according to The Information. The plans could signal further distancing between the two companies.
Demand for dedicated AI chips has surged since ChatGPT was launched last year. To train and run the latest generative AI technology, special chips or AI accelerators are required. Nvidia is one of the few chipmakers that produces useful AI chips and dominates the market.
Reporting by Anna Tong, Stephen Nellis and Max A. Cherney in San Francisco; Edited by Kenneth Li and Stephen Coates
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