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Published Date : 6/10/2025
In a significant move, AMD has signed a multi-year deal to supply AI chips to OpenAI, the creators of ChatGPT. The agreement, which could generate tens of billions in annual revenue, also gives OpenAI the option to buy up to 10% of AMD.
In a significant move, AMD has signed a multi-year deal to supply AI chips to OpenAI, the creators of ChatGPT. The agreement, which could generate tens of billions in annual revenue, also gives OpenAI the option to buy up to 10% of AMD.
SAN FRANCISCO — In a significant development, AMD announced on Monday that it will supply artificial intelligence (AI) chips to OpenAI under a multi-year deal. This agreement is expected to bring in tens of billions of dollars in annual revenue and offers OpenAI the option to purchase up to roughly 10% of the chipmaker.
The deal is a powerful endorsement of Advanced Micro Devices’ (AMD) AI chips and software, positioning the company as a formidable rival to Nvidia. “We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry,” AMD executive vice president Forrest Norrod told Reuters on Sunday.
The agreement covers the deployment of hundreds of thousands of AMD’s AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. OpenAI will build a one-gigawatt facility based on AMD’s forthcoming MI450 series of chips, with revenue recognition expected to begin next year.
AMD executives are optimistic about the deal, predicting that it will net tens of billions of dollars in annual revenue. The ripple effect of the agreement is expected to generate more than $100 billion in new revenue over four years from OpenAI and other customers. “Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem,” AMD strategy chief Mat Hein said.
The deal with AMD will help OpenAI build the necessary AI infrastructure to meet its growing needs, according to OpenAI CEO Sam Altman. Analysts estimate that AMD will generate revenue of $32.78 billion this year, according to LSEG data.
As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal. The warrant vests in tranches based on agreed-upon milestones. The first tranche will vest after the initial shipment of MI450 chips in the second half of 2026. The remaining milestones include specific AMD stock price targets, escalating to $600 a share for the final installment of stock to unlock.
AMD currently has 1.62 billion shares outstanding and is valued at $267.23 billion, with shares closing at $164.67 on Friday. OpenAI, on the other hand, has a valuation of $500 billion.
OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking several steps to ensure it has the necessary chips for its future needs. In September, Nvidia announced an investment of up to $100 billion in OpenAI, which included a plan to supply at least 10 gigawatts worth of Nvidia systems. The plan includes OpenAI deploying a gigawatt of Nvidia’s next-generation Vera Rubin chips in late 2026.
In addition to using Nvidia hardware, cloud computing giants such as Alphabet’s Google and Amazon build their own in-house processors. Similarly, OpenAI is in the process of developing its own silicon for AI use and has partnered with Broadcom. OpenAI and its main backer Microsoft also announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity, signaling further changes in the governance of the fast-growing AI company.
A person familiar with the matter stated that the deal with AMD does not change any of OpenAI’s ongoing compute plans, including its efforts or its partnership with Microsoft.
Frequently Asked Questions (FAQS):
Frequently Asked Questions (FAQS):
Q: What is the main focus of the deal between AMD and OpenAI?
A: The main focus of the deal is for AMD to supply AI chips to OpenAI over several years, which is expected to generate tens of billions of dollars in annual revenue and give OpenAI the option to buy up to 10% of AMD.
Q: What is the estimated value of the deal for AMD?
A: The deal is expected to generate more than $100 billion in new revenue over four years from OpenAI and other customers.
Q: What is the significance of the one-gigawatt facility mentioned in the deal?
A: OpenAI will build a one-gigawatt facility based on AMD’s forthcoming MI450 series of chips, which will help meet its growing AI infrastructure needs.
Q: How does this deal affect the tech industry dynamics?
A: The deal positions AMD as a formidable rival to Nvidia and is expected to influence the broader ecosystem, potentially attracting other companies to follow suit.
Q: What other major partnerships does OpenAI have in the tech industry?
A: OpenAI has partnerships with Nvidia, Microsoft, and is developing its own silicon for AI use, including a partnership with Broadcom.
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