OpenAI and Broadcom Chip Project Faces $18 Billion Financing Challenge

OpenAI's plan to build custom artificial intelligence chips with Broadcom has encountered a major financing obstacle, reports The Information. The companies are negotiating terms for Broadcom to fund the first phase of production, estimated at $18 billion and requiring 1.3 gigawatts of data center capacity.

According to internal documents cited in the report, Broadcom has conditioned its financing on a commitment from Microsoft to purchase about 40% of the chips. Microsoft would deploy the chips in its data centers and lease them back to OpenAI. Without such a commitment, the financing terms could change, forcing OpenAI to seek other buyers.

The chip initiative, code named Nexus, could eventually reach $180 billion in total costs if fully built out to 10 gigawatts of capacity. OpenAI aims to use these chips to reduce its dependence on NVIDIA hardware and lower operational expenses. Broadcom has reportedly eased its previous requirement that OpenAI match its investment dollar for dollar, agreeing instead to contribute more upfront capital.

The companies are also working to secure manufacturing capacity with Taiwan Semiconductor Manufacturing Co. for OpenAI’s first chip, known as Jalapeno, which is now expected to be ready in 2027.