OpenAI is creating its own in-house chip with Broadcom and TSMC as processing demands skyrocket

According to Reuters, which cited exclusive sources close to the company, OpenAI is collaborating with Broadcom and Taiwan Semiconductor Manufacturing Company (TSMC) to diversify its supply chain and control infrastructure costs as it seeks to keep up with the immense computational needs of AI.

While OpenAI had previously considered building its own chip manufacturing foundries, the high costs and lengthy timeline led the company to prioritize in-house chip design. Currently, OpenAI has assembled a team of roughly 20 chip engineers, including experts with experience designing Google’s Tensor Processing Units (TPUs). Together, they hope to develop OpenAI’s first custom chip by 2026—though that timeline is flexible.

The news on Tuesday sent Broadcom Inc. shares up 4% and TSMC’s US-traded shares gained more than 1%.

The move reflects OpenAI’s ongoing strategy to secure consistent chip supply and manage escalating costs, a challenge that other tech giants like Amazon, Meta, Google, and Microsoft have also faced in their AI ventures. This effort includes OpenAI’s recent decision to integrate AMD chips, along with Nvidia’s GPUs, which continue to dominate the market but are in limited supply. In fact, tech giants have been literally begging Nvidia for more chips.

At a meeting with analysts last month, billionaire Oracle cofounder and chief technology officer Larry Ellison said he and world’s-richest-man Elon Musk took Nvidia CEO Jensen Huang out to dinner at Nobu Palo Alto and “begged” for more GPUs.