Nvidia and AMD may face entirely new threat from $100 billion firm β will OpenAI end up buying Graphcore to build its own chips?
Graphcore, the chip-making startup that once counted Microsoft among its customers, may struggle to stay afloat unless it raises millions of dollars in funding within the next few months, according to the latest reports.
Although the explosion of the AI ββindustry has created a high demand for chips, Graphcore has not been able to benefit from it. The British-based unicorn was once considered a major rival to companies like Nvidia and AMD, after becoming a valuation of $2.5 billion in 2020 after the last round of financing. But due to lower sales from βkey strategic customers,β revenues have declined, according to the company Sieved.
To underline the misery, the company once made a deal with Microsoft, itself an investor in the company. This deal ultimately fell through when the company decided not to continue using Graphcore’s chips in its cloud computing systems.
Could OpenAI be the savior of Graphcore and shake up the market?
The company now has less than a year to raise capital to continue functioning as a healthy company, the newspaper said Financial Times (FT)and is pursuing a new round of financing, while discussions with potential investors are ongoing.
In light of the rise of AI, and with the chip market really booming, OpenAI is rumored to be trying to make its own chips AI chipsinstead of running on for example Nvidia’s A100 GPUs to power generative AI platforms like ChatGPT.
OpenAI has gone so far as to identify potential acquisition targets, Reuters reported, but has not yet decided to proceed with a particular action. The main reason is that there is a shortage because chips are in high demand and only a handful are currently mass-producing the components needed to mass-produce AI workloads and LLMs.
The $100 million Silicon Valley giant has also considered building its own chip, working closely with other chipmakers β such as Nvidia β and diversifying its offerings beyond just Nvidia, the market leader. The GPU maker currently has an 80% stranglehold on the market, although challengers are starting to emerge and innovative solutions are in the works.
Should OpenAI decide to invest in a chip manufacturer to build its own powerhouse to either guarantee supply or crack open the market, it need look no further than Graphcore. There’s no guarantee this will happen, but perhaps an early investment is on the horizon as a first step towards something that could potentially develop into a much larger partnership.