OpenAI has announced a major partnership with Broadcom to design and produce its first in-house artificial intelligence (AI) processors. This strategic move is to strengthen its computing infrastructure and reduce reliance on Nvidia chips.
Under the deal, OpenAI will design the chips while Broadcom develops and deploys them, with production slated to begin in the second half of 2026. The partnership aims to roll out 10 gigawatts worth of custom AI chips. This will provide enough power to support over 8 million U.S. households or five times the energy output of the Hoover Dam.
“Partnering with Broadcom is a critical step in building the infrastructure needed to unlock AI’s potential,” OpenAI CEO Sam Altman said in a statement.
While financial details were not disclosed, analysts say the agreement underscores the industry’s growing race to secure AI computing power, which has become increasingly scarce amid skyrocketing demand. The project’s scale positions Broadcom as one of OpenAI’s most important hardware partners, building on their existing co-development and supply arrangements.
The announcement sent Broadcom’s shares up more than 10% as investors welcomed the news. It follows a series of major chip-related moves by OpenAI, including a 6-gigawatt supply deal with AMD and a planned $100 billion data center investment backed by Nvidia.
Industry experts say the Broadcom collaboration places OpenAI in the same league as Google, Amazon, and Microsoft, which have all begun developing custom AI chips to manage costs and reduce dependence on external suppliers.
However, analysts caution that building chips from the ground up is a complex and costly process. A 1-gigawatt data center can cost between $50 billion and $60 billion, according to Nvidia CEO Jensen Huang, and may take years to reach full capacity.
The companies expect full deployment of the new systems by 2029, using Broadcom’s Ethernet and networking technology. This will be a potential challenge to Nvidia’s InfiniBand system that currently dominates AI data centers.