OpenAI has partnered with Broadcom to produce its first in-house artificial intelligence (AI) chips, reducing its dependence on external suppliers such as Nvidia.
The collaboration will see Broadcom develop and deploy OpenAI-designed processors beginning in the second half of 2026, with full rollout expected by 2029.
According to both companies, the project will deliver up to 10 gigawatts of custom chips, a scale that would consume roughly the same power as eight million U.S. homes or five times the energy output of the Hoover Dam.
Shares of Broadcom rose by more than 10% after the announcement, as investors believe in the chipmaker’s impact in the AI hardware market.
“Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI’s potential,” Sam Altman, CEO of OpenAI, said in a statement.
While the financial terms of the deal remain undisclosed, analysts say OpenAI’s plan is capital-intensive. Gadjo Sevilla, an analyst at eMarketer, noted 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.”
Experts estimate that a single 1-gigawatt data centre could cost between $50 billion and $60 billion, with Nvidia products alone accounting for more than half of those expenses. This places the estimated cost of OpenAI’s 10GW buildout at a huge scale, stressing the financial commitment required to sustain its growing AI infrastructure.
The Broadcom partnership follows a string of recent hardware deals by OpenAI. Just last week, the company announced a 6-gigawatt chip supply agreement with AMD, which includes an option to acquire a stake in the chipmaker.
Days earlier, Nvidia revealed plans to invest up to $100 billion in OpenAI and provide advanced data-centre systems with at least 10GW of capacity.
In joining the ranks of companies like Google, Amazon, and Meta, which already design custom silicon for their AI systems, OpenAI aims to gain a stronger hold on its computing backbone.
However, creating high-performance chips from scratch remains a big technical challenge. Even Microsoft and Meta’s internal chip projects have struggled to match Nvidia’s performance in the AI accelerator space.
For Broadcom, the collaboration strengthens its standing as one of the biggest beneficiaries of the AI hardware boom. The company’s stock has surged nearly sixfold since the end of 2022, driven by rising demand for custom chips and networking solutions.
Last month, Broadcom revealed a $10 billion order from an unnamed new client, though the company later clarified that OpenAI was not that customer.
The upcoming OpenAI chips will be scaled entirely on Broadcom’s Ethernet and networking infrastructure, directly challenging Nvidia’s InfiniBand system, which currently tops high-performance AI workloads.
If OpenAI meets its 2026 production target, it would be one of the fastest chip development turnarounds in the industry’s history, and a big moment for a company aiming to keep pace with its own growth.
