OpenAI in talks to raise at least $12.9b from Amazon and use its AI chips
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The deal under discussion could value OpenAI north of US$500 billion and see it adopt Amazon’s Trainium chip.
PHOTO: REUTERS
San Francisco – OpenAI is in initial discussions to raise
The deal under discussion could value OpenAI north of US$500 billion and see it adopt Amazon’s Trainium chip, a person with knowledge of the matter said. Talks 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 are starting to explore rival offerings from the likes of Alphabet’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 (AWS) 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, 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 talks between OpenAI and Amazon began around October after the ChatGPT creator completed a corporate overhaul, The Information reported earlier. Microsoft took a 27 per cent ownership stake as part of a restructuring plan that took nearly a year to negotiate.
OpenAI was last valued at US$500 billion in an employee share sale, briefly propelling it past Mr Elon Musk’s SpaceX to become the world’s largest start-up.
That rapid rise underscores the investment frenzy surrounding the leaders of a technology with the potential to transform industries and economies.
But 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 in November announced a deal in which AWS will supply the start-up with US$38 billion of cloud computing power over seven years. That announcement centred on hundreds of thousands of Nvidia chips. BLOOMBERG
