OpenAI Seeks $10 Billion Investment From Amazon as Part of AI Chip Strategy
OpenAI is actively debating a funding round to raise up to $10 billion led by Amazon and deploy its chips, which, potentially, can be a victory in the quest of the online retailer to expand its presence in the AI industry and compete with Nvidia Corp.
The transaction in question may be worth more than half a trillion dollars, and it may result in OpenAI adopting the Trainium chip used by Amazon, a source familiar with the deal said but declined to be identified to discuss confidential talks. Discussions, though, are still in their infancy, and conditions might be altered, the individual added.
An acquisition would be a victory to the fledgling semiconductor business of Amazon. Although Nvidia holds a leading role in the market of the high-performance chips needed to develop AI platforms, other developers are beginning to check out alternative products offered by competitors like Google of the Alphabet Inc. company.
One of the main components of the Amazon approach to leading in AI is the Trainium chip that should be used alongside its cloud business. Amazon Web Services is the biggest vendor of rented computing assets and information storage, yet it has not succeeded in duplicating that lead among AI creators due to the severe rivalry with companies including Microsoft Corp., one of the biggest patrons of OpenAI.
Amazon has hopes that it can attract companies that are seeking a bargain. The company believes that Trainium chips can execute the intensive computations in the AI models more cheaply and efficiently than the graphics processing units that dominate the market in Nvidia.
The talks between OpenAI and Amazon started at around October when the ChatGPT creator concluded a business restructuring, The Information reported. In a restructuring initiative that took close to a year to settle on, Microsoft acquired 27 percent stake ownership. OpenAI and Amazon masterclass representatives were not willing to comment.
The last valuation of OpenAI was 500 billion in an employee share sale, which briefly made the ChatGPT owner more valuable than Elon Musk and SpaceX, making it the largest startup in the world.
Such a spurt highlights the investment mania that surrounded the leaders of a technology that had the potential to revolutionise industries and economies. The Wall Street analysts have been cautioning over the past few months that there could be a bubble forming, partly due to the circularity of some of those investment deals whereby companies are investing heavily in potential customers to maintain the spending on their own products.
Last month, Amazon announced a deal where AWS will provide the startup with 38 billion of cloud computing power over seven years. The focus of that announcement was hundreds of thousands of Nvidia chips.
