OpenAI In Talks To Raise $10 Billion From Amazon, Use Its Chips

OpenAI is in initial discussions to raise at least $10 billion from Amazon.com Inc. and use its chips, a potential win for the online retailer’s effort to broaden its AI industry presence and compete with Nvidia Corp.

The deal under discussion could value OpenAI north of $500 billion and see it adopt Amazon’s Trainium chip, a person with knowledge of the matter said, asking to remain anonymous to describe private negotiations. Talks, however, are at a preliminary stage and terms could change, the person added.

A deal would mark a win for Amazon’s fledgling semiconductor division. While Nvidia dominates the market for the powerful chips required to create AI platforms, developers such as Meta Platforms Inc. are starting to explore rival offerings from the likes of Alphabet Inc.’s Google.

The Trainium chip is a key element of Amazon’s strategy to stand out in AI, complementing its cloud division. Amazon Web Services is the largest seller of rented computing power and data storage, but it has struggled to replicate that dominance among AI developers given intense competition from the likes of Microsoft Corp., one of OpenAI’s largest backers.

Amazon hopes to entice companies looking for a bargain. Trainium chips are capable of powering the intensive calculations behind AI models more cheaply and efficiently than Nvidia’s market-leading graphics processing units, according to the company. 

The negotiations between OpenAI and Amazon began around October after the ChatGPT creator completed a corporate overhaul, the Information reported earlier. Microsoft took a 27% ownership stake as part of a restructuring plan that took nearly a year to negotiate. 

Representatives for OpenAI and Amazon declined to comment.

OpenAI was last valued at $500 billion in an employee share sale, briefly propelling the ChatGPT owner past Elon Musk’s SpaceX to become the world’s largest startup.

That rapid rise underscores the investment frenzy surrounding the leaders of a technology with the potential to transform industries and economies. In recent months, Wall Street analysts have warned of a potential bubble forming, in part because of the circular nature of some of those investment deals — where companies invest heavily in potential customers to keep up spending on their own products.

OpenAI and Amazon last month announced a deal in which AWS will supply the startup $38 billion of cloud computing power over seven years. That announcement centered on hundreds of thousands of Nvidia chips.