OpenAI and Broadcom sign 10GW deal

Core Insights - Broadcom's shares rose after announcing a partnership with OpenAI to deploy 10 gigawatts of custom AI chips over the next four years, aimed at securing chip supply and infrastructure [1][2] - OpenAI and Broadcom have been collaborating for 18 months to develop custom AI chips to compete with Nvidia and AMD, with no equity involved in this deal [2] - The custom chips are projected to be approximately 30% cheaper than current GPU options, allowing OpenAI to control the entire process from transistor design to rack deployment [3] Strategic Implications - This partnership highlights OpenAI's strategy to build protective modes in its operations, as the technical advantages in AI are diminishing due to the open nature of transformer architecture and commoditized training data [4] - The Broadcom deal addresses the hardware needs of OpenAI, which is essential for achieving faster models and better performance [4] - OpenAI is also expanding its offerings for developers, including new products and an app store within ChatGPT, signaling a broader strategy to enhance its ecosystem and maintain competitive advantages [5][6]