OpenAI Chooses TSMC's Cutting-Edge A16 Node for its AI Chip Debut

OpenAI is taking a major leap into custom silicon. According to reports from Taiwan, the AI powerhouse has chosen TSMC, the world's leading chip manufacturer, to produce its first-ever AI chips. These chips will be manufactured using TSMC's advanced 1.6-nanometer A16 process node, slated for mass production in late 2026.

This strategic move comes amidst OpenAI's tremendous growth and escalating costs. With a reported annualized revenue of $3.4 billion, over 200 million weekly ChatGPT users, and adoption by 92% of Fortune 500 companies, OpenAI is booming. However, the Financial Times reports that OpenAI is on track for a $5 billion loss this year, largely due to the high cost of training its massive AI models.

By developing its own specialized AI chips with TSMC, OpenAI aims to gain control over its financial future and potentially alleviate these losses. The A16 node promises significant performance and efficiency gains over previous generations, offering up to 10% speed improvements and consuming up to 20% less power. This could translate into substantial savings for OpenAI, especially as its computational demands continue to grow.

This decision to partner with TSMC marks a shift from earlier reports that OpenAI was considering an investment in its own chip fabrication facilities. Instead, OpenAI is opting for a more practical approach: collaborating with established chip design companies like Broadcom and Marvell to create custom AI accelerators specifically tailored for TSMC's advanced nodes.

Interestingly, this move towards custom silicon aligns OpenAI with industry giants like Apple, which is rumored to be the first major customer to secure A16 production capacity. This suggests that OpenAI is serious about competing at the highest level of the AI hardware market.

This strategic move coincides with OpenAI's ongoing discussions about changing its corporate structure to become more investor-friendly. As reported by the Financial Times, OpenAI is in talks to raise new capital at a valuation of more than $100 billion. This restructuring could involve removing the existing cap on profits for investors, making OpenAI a more traditional investment opportunity.