AMD and OpenAI Announce Landmark AI Chip Supply Deal
AMD has secured a multi-year agreement to supply artificial intelligence chips to OpenAI, a deal expected to generate tens of billions in annual revenue and give the ChatGPT creator an option to acquire up to roughly 10% of the chipmaker.
Key Takeaways
- AMD will supply hundreds of thousands of AI chips (GPUs) to OpenAI over several years.
- The deal includes an option for OpenAI to purchase up to 160 million AMD shares at 1 cent each.
- Deployment begins in second half of 2026 with AMD’s forthcoming MI450 series chips.
- AMD expects over $100 billion in new revenue over four years from this deal and its ripple effects.
Strategic Partnership Details
The agreement represents a powerful endorsement of AMD’s AI technology and positions the company as a formidable rival to Nvidia. “We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry,” said AMD executive vice president Forrest Norrod.
The deployment will involve AMD chips equivalent to six gigawatts of computing power. OpenAI will build a one-gigawatt facility based on AMD’s MI450 series beginning next year, with revenue recognition starting at that time.
Financial Implications
AMD executives project the deal will net tens of billions in annual revenue. Due to the agreement’s broader impact, the company anticipates more than $100 billion in new revenue over four years from OpenAI and other customers.
“Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem,” noted AMD strategy chief Mat Hein.
Stock Option Structure
As part of the arrangement, AMD issued a warrant allowing OpenAI to purchase up to 160 million shares for 1 cent each. The warrant vests in tranches based on agreed milestones, with the first tranche activating after initial MI450 chip shipments in late 2026.
Remaining milestones include specific AMD stock price targets escalating to $600 per share for the final installment. AMD currently has 1.62 billion shares outstanding and is valued at $267.23 billion.
OpenAI’s Broader Chip Strategy
OpenAI CEO Sam Altman stated the AMD partnership will help the company build sufficient AI infrastructure. This comes as OpenAI pursues multiple avenues to secure computing resources.
The company has collaborated with AMD for years, providing input on previous chip generations like the MI300X. In September, Nvidia announced plans to supply at least 10 gigawatts worth of systems to OpenAI, including next-generation Vera Rubin chips in late 2026.
OpenAI is also developing its own AI silicon through a partnership with Broadcom, while cloud giants like Google and Amazon build in-house processors. The AMD deal doesn’t affect OpenAI’s ongoing compute plans, including its partnership with Microsoft, according to sources familiar with the matter.
