AMD chief executive officer Lisa Su. — Bloomberg
NEW YORK: Advanced Micro Devices Inc (AMD) has landed a blockbuster deal with OpenAI to build artificial intelligence (AI) infrastructure, giving the chipmaker a chance to show it can mount a challenge to Nvidia Corp in the AI computing industry.
AMD shares soared 24% to US$203.71 after the agreement was announced Monday, adding US$63.4bil to the company’s market valuation. It’s now worth US$330.6bil, more than Coca-Cola Co, General Electric Co or Chevron Corp.
OpenAI will deploy 6GW worth of AMD graphics processing units over multiple years, according to the pact, which is just over half the size of an agreement the AI startup recently reached with Nvidia.
It also sets the stage for OpenAI to acquire a large stake in the chipmaker.
The deal represents a high-stakes test for AMD – one that could deliver tens of billions of dollars in new revenue and burnish its status as a serious contender in AI technology. There are also risks: It further ties AMD’s prosperity to an AI market that some worry is in a bubble.
“This is certainly the largest deployment we have announced so far,” AMD chief executive officer Lisa Su said during an interview on Bloomberg Television.
“Now we’re embarking on a massive build-out. It’s a big deal for us, for our shareholders and our teams.”
As part of the accord, OpenAI will have the ability to buy as many as 160 million shares of AMD at a penny apiece, depending on the project hitting certain milestones. That’s equivalent to about 10% of the chipmaker’s outstanding stock.
The targets require AMD’s share price to continue to increase in value. At the final level of the agreement, the stock would have to reach a price of US$600. AMD shares closed last Friday at US$164.67.
The chipmaker wanted to make sure “OpenAI would be motivated for AMD to be successful,” Su said on a conference call. “And the more OpenAI deploys, the more revenue we get, and they get to share in the upside.”
The deal is the latest huge data centre deal for OpenAI as the AI startup builds out more computing capacity – an unprecedented bet by the technology industry that runaway demand for power-hungry AI tools will continue unabated. — Bloomberg
