OpenAI Chooses Broadcom to Design Its First AI Processor

Published: 14 Oct 2025

Author: Precedence Research

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OpenAI entered into a partnership with Broadcom to establish its first in-house AI processors. This tie-up aims to secure the computing power needed to meet the growing demand for Artificial Intelligence-powered services. According to the statement released by the company, OpenAI will design the chips, which Broadcom will work on to develop and deploy in the second half of 2026. They will generate 10 gigawatts worth of custom chips, which have a power consumption nearly equivalent to the needs of more than 8 million U.S. households, or 5 times the electricity generated by the Hoover Dam. 

Surprisingly, many analysts were not expecting this deal. This latest strategic deal between these two tech leaders to develop custom AI chips aims to challenge NVIDIA's monopoly and its grip over AI chip production. Hence, they have started it by designing, manufacturing, and scaling in-house AI chips from the ground up.

In the last week, OpenAI introduced a 6-gigawatt AI chip supply deal with AMD, which includes an alternative to buy a stake in the chipmaker. The deal was announced just after NVIDIA's ambitious move to invest up to $100 billion in the start-up and offer data center systems with nearly 10 gigawatts of capacity. OpenAI CEO said, “Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI's potential.” 

However, any party has not yet disclosed the financial details, and it is still unclear how OpenAI will fund the deal. The 2026 timeline set by OpenAI is immensely aggressive, but the start-up is best positioned to secure the necessary funds for the upcoming project, which has further boosted investor confidence. In the overall scenario, an analyst at eMarketer, Gadjo Sevilla, stated that, “Financing such a large chip deal will likely require a combination of funding rounds, pre-orders, strategic investments, and support from Microsoft, as well as leveraging future revenue streams and potential credit facilities.”

This tie-up between OpenAI and Broadcom is expected to weaken NVIDIA's hold on AI chip manufacturing and its position as a leading supplier in the market, reducing dependency on NVIDIA's costly and supply-constrained processors.