OpenAI and AMD link arms for AI buildout: It's a power-for-equity swap

AMD and OpenAI have forged a 6 gigawatt agreement to power OpenAI's AI infrastructure across multiple generations of AMD Instinct GPUs.

In a statement, the chipmaker said the first deployment of MI450 GPUs was set to start in the second half of next year.

The GenAI poster child said it planned to work with AMD as a "core strategic compute partner", including a roll out of rack AI solutions as well as a commitment to future generations.

The deal comes after OpenAI also hooked up with Nvidia in a mega chip agreement which signaled the LLM builder's intent to buy at least 10 gigawatts of the GPU giant's systems for its datacenters, in return for an investment of up to $100 billion.

The AMD contract is also linked to a financial investment. As part of it, the house of Zen has issued OpenAI a warrant for up to 160 million shares of AMD common stock, structured to pay out as provided specific staged targets are met. "Vesting" is also dependent on AMD hitting share-price targets and to OpenAI achieving the technical and commercial milestones.

"We are thrilled to partner with OpenAI to deliver AI compute at massive scale," said Dr Lisa Su, AMD's chair and CEO, in a prepared statement. "This partnership brings the best of AMD and OpenAI together to create a true win-win, enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem."

Following official word of the alliance with OpenAi, AMD's share price price shot up double digits. One hedge fund trader and manager, made a wry comment on the turn of events.

"I make potato farming equipment and I gave new farmer Jones, who is light years from making a profit farming, a slug of my company and in return he promises to use his new found money to buy my equipment to till fields in lands he does not yet own. My company in now 35% more valuable?"

Sam Altman, OpenAI CEO, said the partnership would be a "major step in building the compute capacity needed to realize AI's full potential."

OpenAI has also struck trade arrangements with two South Korean chip titans. The ChatGPT builder said earlier this month that Samsung and SK Hynix had agreed to supply advanced memory chips and collaborate on local AI datacenters.

In an employee share sell-off last week, OpenAI was valued at $500 billion, making it the most valuable startup after SpaceX. It does not expect its cash flow to turn positive until 2029.

OpenAI does not expect to be cashflow positive until 2029, according to reports earlier this year. It is forecast to turnover $12.7 billion this year. ®