OpenAI Broadcom $18B custom inference chip deal stalls; Microsoft $MSFT has not committed to buying 40%
OpenAI's $18B custom inference chip deal with Broadcom $AVGO has hit a financing snag. Broadcom will only finance the first phase if Microsoft $MSFT commits to buying roughly 40% of the chips. Microsoft has not signed. AVGO fell about 4% on the report. Source: Yahoo Finance
OpenAI's $18 billion custom inference chip project with Broadcom $AVGO has hit a financing snag. Under the proposed arrangement, Broadcom would finance the first phase of production only if Microsoft $MSFT agrees to buy roughly 40% of the chips. Microsoft would then install the chips in its data centers and rent capacity back to OpenAI. The Microsoft purchase commitment is what would give Broadcom confidence it could recover the capital. Microsoft has not signed a firm purchase agreement. The first phase alone would consume around 1.3 gigawatts of data center capacity. Broadcom shares slipped about 4% after the report surfaced. OpenAI has projected its operating expenses will run past $200 billion through 2029, and a custom in-house chip is central to its plan to lower server costs and improve margins. Sources: Yahoo Finance, DCD