Open AI is exploring making its own AI chips¹⁹ to solve its shortage of expensive AI chips that power its software and products. The company relies heavily on Nvidia's graphics processing units (GPUs) and Microsoft’s partnership to access them.

What does this mean?

Open AI sees in-house chip development as key to tackling two big problems: the global scarcity of high-end AI chips and the massive computing costs of running systems like ChatGPT. CEO Sam Altman has made acquiring more AI chips a top priority given Open AI's reliance on Nvidia, which controls over 80% of the AI chip market.

Why should I care?

Custom AI chips could significantly reduce Open AI's hardware costs and chip shortage issues, allowing it to scale its AI technologies more easily. However, building custom AI chips is a complex and expensive endeavour that could cost hundreds of millions of dollars with no guarantee of success. Even if Open AI acquires a chip company, it would still take years to develop its own chips.