NVIDIA+OpenAI partnership attracts attention…to delay OpenAI's own chip development?

Antitrust concerns as leading companies in the AI market form a partnership

The partnership between NVIDIA and OpenAI is drawing attention as a collaboration between two of the leading companies in the global artificial intelligence (AI) competition. Some have raised concerns about potential violations of antitrust laws. NVIDIA holds an overwhelming share of the AI chip market, and OpenAI's AI models have the highest share among AI models.

According to Reuters on the 23rd (local time), the scale of NVIDIA's investment in OpenAI is up to $100 billion (139 trillion won), and a significant portion of this is expected to be used to purchase NVIDIA chips for data centers. With this deal, NVIDIA will secure a financial stake in the world's largest AI company, which is already an important customer.

OpenAI, meanwhile, will secure the funding and access needed to purchase the advanced chips essential to maintaining its dominance in an increasingly competitive environment. Companies that compete with the two firms may worry that this partnership will hinder competition.

According to an OpenAI official, the partnership between the two companies consists of two separate but closely related transactions. NVIDIA will begin investing in OpenAI in the form of non-voting shares, and OpenAI can then use the investment funds to purchase NVIDIA's chips, the official said.

OpenAI CEO Sam Altman said in a statement, "Everything starts with computing," and added, "Computing infrastructure will be the foundation of the future economy, and we will create new AI innovation by leveraging the technology we are building with NVIDIA."

The two companies signed a letter of intent to build at least 10 gigawatts of NVIDIA systems for OpenAI, and plan to finalize the partnership details in the coming weeks. Ten gigawatts of power is equivalent to the power needed by more than 8 million U.S. households.

NVIDIA's stock rose as much as 4.4% after the announcement, hitting an intraday high, and data center builder Oracle also saw gains. Oracle is participating in a $500 billion project called "Stargate" alongside OpenAI, SoftBank, and Microsoft.

According to sources, under the new agreement, if both sides ultimately agree on OpenAI's acquisition of NVIDIA systems, NVIDIA will make an initial investment of $10 billion. OpenAI's recent corporate valuation was $500 billion.

NVIDIA plans to begin supplying hardware from the end of 2026, and gigawatt computing power will first be loaded onto a platform to be launched under the name Vera Rubin in the second half of next year.

Analysts said the deal is positive for NVIDIA. However, some worried that part of NVIDIA's investment might return to NVIDIA in the form of chip purchases.

Bernstein analyst Stacy Rascon pointed out that "it helps OpenAI achieve its ambitious goals for computing infrastructure, and NVIDIA helps ensure those goals are met."

But other analysts questioned why NVIDIA would support customers in buying equipment.

One analysis suggests it may be to delay one of its largest customers, OpenAI, from developing its own AI chips.

Like Google and Amazon, OpenAI is pursuing the development of its own AI chips with the goal of procuring AI chip alternatives cheaper than NVIDIA's. It is currently developing a custom chip with semiconductor design firm Broadcom and foundry TSMC.

Major U.S. tech companies have recently announced a string of partnerships and deals. Microsoft has invested billions in OpenAI since 2019. NVIDIA last week announced a cooperation plan with Intel that includes a $5 billion investment in Intel.

Reuters reported that NVIDIA's recent partnerships with companies could be subject to investigation for potential antitrust law violations. The U.S. Department of Justice and the Federal Trade Commission opened the possibility of potential investigations into the roles of Microsoft, OpenAI, and NVIDIA in the AI industry in mid-2024. However, the Trump administration has taken a more lenient approach to competition issues than the Biden administration.

Antitrust lawyers noted that "the NVIDIA-OpenAI partnership could make it harder for NVIDIA competitors like AMD in the AI chip market, and for OpenAI competitors in the AI model market, to scale."

The day before, NVIDIA's stock, which had risen 3.9% on news of the OpenAI investment, was trading at $182, down 0.6% in premarket trading on the 23rd.

Guest reporter Kim Jeong-a kja@hankyung.com