Broadcom Inc., the chip designer behemoth that made its name in Irvine before heading to Silicon Valley, has sealed a deal reportedly worth billions to make custom semiconductors for ChatGPT creator OpenAI.
“If you do your own chips, you control your destiny,” Broadcom Chief Executive Hock Tan said in announcing the collaboration on Oct. 13.
While the companies did not release financial details, the Wall Street Journal quoted people familiar with the matter as saying the deal will be worth “multiple billions of dollars.”
Broadcom was founded by Henry Samueli and Henry Nicholas in 1991, and its market cap hit $1.7 trillion last week on the deal’s announcement. Samueli, who remains Broadcom’s board chairman, is one of Orange County’s leading philanthropists and is currently the wealthiest person residing in Orange County.
Broadcom was ranked No. 1 on this year’s Business Journal list of largest chipmakers with operations in Orange County, with an estimated 1,300 employees in Irvine. That dwarfs No. 2 Skyworks Solutions Inc., which has 563 local employees.
After the news, shares of Broadcom rose 9.9% to $356.70 on Oct. 13 (Nasdaq: AVGO). Since Broadcom moved its headquarters to Silicon Valley in 2016, its market cap has risen more than 100-fold from $15.5 billion.
OpenAI says it has grown to over 800 million weekly active users and strong adoption across global enterprises, small businesses, and developers. After a secondary share sale on Oct. 2, its estimated valuation has soared to $500 billion from $300 billion.
The custom AI chips and computing systems are aimed at satisfying some of OpenAI’s huge computing needs.
“Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI’s potential and deliver real benefits for people and businesses,” Sam Altman, OpenAI’s co-founder and chief executive said in the statement.
Designing Own Chips
On Sept. 4, Broadcom announced fiscal third-quarter revenue climbed 22% to $16 billion with adjusted net income of $8.4 billion. The company said its AI revenue jumped 63% to $5.2 billion.
OpenAI and Broadcom said the collaboration is for 10 gigawatts of custom “AI accelerators.” AI accelerators are specialized hardware that speed up artificial intelligence tasks.
OpenAI will design the accelerators and systems, which will be built and deployed in partnership with Broadcom.
Broadcom is set to deploy racks of AI accelerators and network systems beginning in the second half of 2026 with a completion date expected at the end of 2029.
“Our collaboration with Broadcom will power breakthroughs in AI and bring the technology’s full potential closer to reality,” said OpenAI co-founder and President Greg Brockman.
“By building our own chip, we can embed what we’ve learned from creating frontier models and products directly into the hardware, unlocking new levels of capability and intelligence.”
OpenAI Partnerships
OpenAI in recent weeks has announced partnerships with chipmakers Nvidia and AMD that will supply the AI startup with specialized chips for running its AI systems, the Associated Press (AP) reported.
OpenAI has also made big deals with Oracle, CoreWeave and other companies developing the data centers where those chips are housed, according to the news agency.
The companies said they had been collaborating on the project for 18 months but only announced it on Oct. 13.
“What’s real about this announcement is OpenAI’s intention of having its own custom chips,” Gil Luria, head of technology research at D.A. Davidson, told AP. “The rest is fantastical.
OpenAI has made, at this point, approaching $1 trillion of commitments, and it’s a company that only has $15 billion of revenue.”
