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OpenAI builds its own AI chip with Broadcom

OpenAI builds its own AI chip with Broadcom

New Capabilities

Jalapeño, OpenAI's first custom processor, is built to serve models for about half the cost of standard GPUs.

Today: OpenAI and Broadcom unveil Jalapeño

Overview

Every time you ask ChatGPT a question, OpenAI rents the chips that answer it, mostly from Nvidia. On June 24, OpenAI and Broadcom unveiled Jalapeño, OpenAI's first chip of its own, built to do that work for roughly half the cost.

The chip only runs models, it doesn't train them. But running models is where the money goes once hundreds of millions of people use a product daily. Owning that hardware lets OpenAI cut its single largest cost and lean less on Nvidia.

Why it matters

The cost of running AI sets the price of every chatbot, coding tool, and assistant. Cut it in half and the economics of the whole industry shift.

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Key Indicators

~50%
Lower serving cost
Reported cut in inference cost versus standard AI GPUs, pending an independent technical report.
9 months
Design to tape-out
Time from start to a finished design ready for manufacturing, sped up using OpenAI's own models.
10 GW
Total deal scale
Custom accelerators OpenAI plans to deploy with Broadcom through 2029, enough to power several large data centers.
~40%
Microsoft's expected share
Portion of the chips Microsoft is reported to plan to buy.

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People Involved

Greg Brockman
Greg Brockman
Leading OpenAI's push to design its own hardware
 Hock Tan
Hock Tan
Manufacturing partner for OpenAI's chip
 Jensen Huang
Jensen Huang
Faces a major customer building an alternative

Organizations Involved

OpenAI
OpenAI
AI research and product company
Designed its first chip

The maker of ChatGPT, now designing its own processors to lower the cost of running its models.
Broadcom Inc.
Broadcom Inc.
Semiconductor and infrastructure company
Builds and ships the chip

The chipmaker turning OpenAI's design into silicon and supplying the networking to connect the chips at data-center scale.

Timeline

September 2025 June 2026

3 events Latest: Today

  1. OpenAI and Broadcom unveil Jalapeño

    Today Product

    OpenAI reveals its first custom chip, built to serve models for about half the cost of standard GPUs. Designed in nine months, it is set for initial deployment by the end of 2026.

  2. OpenAI and Broadcom announce the 10-gigawatt chip plan

    Deal

    The two say OpenAI will design custom accelerators and Broadcom will build and deploy them, starting in late 2026 and running through 2029. Broadcom shares jumped.

  3. OpenAI and Nvidia announce a multi-gigawatt deal

    Deal

    OpenAI and Nvidia unveil a partnership to deploy large amounts of Nvidia compute, reportedly worth up to $100 billion.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

May 2016

Google builds the TPU (2015)

Google revealed it had quietly built its own AI chip, the Tensor Processing Unit, to run its machine-learning workloads. It had been using the chips in its data centers for about a year before saying so. The goal was the same as OpenAI's: serve models faster and cheaper than off-the-shelf hardware.

Then

Google cut its cost of running AI services and reduced its dependence on outside chip suppliers.

Now

The TPU became a core part of Google Cloud and proved a big AI company could design competitive silicon in-house.

Why this matters now

Jalapeño follows the same playbook a decade later. It shows custom inference chips can pay off, and that the hard part is volume manufacturing, not the first design.

November 2020

Apple drops Intel for its own silicon (2020)

Apple replaced Intel processors in its Mac computers with chips it designed itself, the M1. After years of buying from Intel, Apple decided controlling the chip let it tune hardware and software together for better speed and battery life.

Then

The first M1 Macs beat Intel models on speed and efficiency, and Apple's margins improved.

Now

Apple now designs the chips in nearly all its products, and Intel lost a marquee customer.

Why this matters now

OpenAI's pitch echoes Apple's: design the chip and the model together and you get gains a general-purpose supplier can't match. The risk for Nvidia is losing a top customer the way Intel lost Apple.

Sources

(6)
+2
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