according to the latest reports from foreign media, the ai chip partnership between openai and broadcom has reached an impasse. internal memos and two sources familiar with the negotiations reveal that the two sides are currently discussing a deal in which broadcom would provide funding to advance the first phase of chip production infrastructure; however, broadcom is making microsoft’s purchase of roughly 40% of the chip manufacturing capacity a condition for securing this financing.
openai and chip design firm broadcom announced last year that they would jointly develop custom ai chips. several months later, the collaboration entered a critical financing stage. the first phase alone will require 1.3 gigawatts of data center computing capacity and is estimated to cost about $18 billion. based on these costs, a full-scale project codenamed nexus with a total capacity of 10 gigawatts would see chip production alone accounting for as much as $180 billion—excluding the expenses for data center construction and other supporting infrastructure.
securing this financing is crucial for openai. the company projects that its operating cash burn will exceed $200 billion by 2029. developing its own chips is a core component of openai’s strategy to reduce server costs and improve gross margins. however, negotiations have now hit a potential deadlock. in an internal memo last month, a senior openai executive informed colleagues that broadcom has made it clear it will only provide funding for the initial phase of the project if microsoft agrees to purchase roughly 40% of the chip production capacity. under this arrangement, microsoft would deploy the chips in its own data centers and then lease computing power back to openai.
sources involved in the negotiations say that microsoft has decades of experience operating data centers and enjoys a top-tier global credit rating; thus, if microsoft were to commit to purchasing the chips, it would give broadcom strong confidence that its investment could be recouped. the memo also notes that microsoft may choose not to purchase the custom chips after all, which would directly alter the terms of the project’s financing. according to the memo and two negotiation insiders, the proposed chip partnership agreement now includes a new clause: if microsoft’s actual procurement falls short of the agreed-upon level, openai must independently find another buyer to step in.
