AMD Secures Multi-Billion Dollar AI Chip Deal with OpenAI, Stock Soars 25%
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A landmark agreement between AMD and OpenAI will see the semiconductor giant supply tens of billions of dollars worth of artificial intelligence (AI) chips to the AI developer, alongside a potential equity stake for OpenAI. The deal, announced Thursday, sent AMD’s share price surging 25% in New York trading.
The multi-year contract will involve AMD providing hundreds of thousands of GPU chips to OpenAI, beginning in the second half of next year, according to Reuters. This collaboration marks a significant expansion of AMD’s presence in the rapidly growing AI hardware market.
Powering the Future of AI Infrastructure
The scale of the agreement is substantial. The chips will power a 1 gigawatt (GW) facility built by OpenAI based on AMD’s forthcoming MI450 chip, scheduled for release next year. To put this into perspective, 1 GW is equivalent to the power generation capacity of a single nuclear power plant. AMD anticipates the deal will generate tens of billions of dollars in annual revenue, with a projected ripple effect leading to over $100 billion in new sales for both companies and other customers over the next four years.
“This partnership will combine the greatest capabilities of AMD and OpenAI to create a true win-win,” a company release stated. OpenAI’s Sam Altman echoed this sentiment, noting that the collaboration “is an important step in building the computing capabilities needed to realize AI potential as much as possible.”
Strategic Equity Investment
To further align strategic interests, AMD has granted OpenAI the option to acquire up to 160 million shares of its common stock at a price of $0.01 per share. Should OpenAI exercise this option under specified conditions, it could gain approximately a 10% stake in AMD. Currently, AMD has 1.62 billion shares outstanding with a market capitalization of $267.33 billion (roughly 376 trillion won). OpenAI is valued at an estimated $500 billion (approximately 700 trillion won).
Competition Heats Up in the AI Chip Market
This deal underscores the intensifying competition in the AI chip market. Just days prior, on November 22nd, OpenAI secured a $100 billion investment from AMD’s rival, NVIDIA. That investment will fund the construction of a 10 GW data center powered by NVIDIA technology.
The surge in demand for AI processing power is driving unprecedented growth for semiconductor companies. The AMD-OpenAI partnership represents a major win for AMD, solidifying its position as a key player in the future of AI infrastructure.
