C_NCENTRATE 951: OpenAI wants chips, being more visible, super strong robots, quantum dots ... +++
Focused on the emerging side of things; technologies, territories, tools, strategies and ideas. Written by TBD Group (intelligence products, advisory, and events).
OPENAI WANTS TO MAKE CHIPS
Someone spilt the beans to Reuters that OpenAI was exploring the possibility of creating its own AI chips. They aren’t the only ones, so why is everyone so up in arms about the move?
Since at least last year, OpenAI’s Sam Altman has been discussing the possibility of acquiring an AI chip-making company (and has gone as far as evaluating a potential acquisition target, according to people familiar with the company’s plans). Altman is also exploring the option of working more closely with Nvidia and/or diversifying suppliers beyond Nvidia, but no ink is on any contracts yet. There is though a reason why OpenAI in particular may be more desperate; an analysis from Bernstein analyst Stacy Rasgon found that if ChatGPT queries grew to a tenth the scale of Google Search, it’d require roughly $48.1 billion worth of GPUs initially and about $16 billion worth of chips a year to keep operational.
If OpenAI chooses to develop its own chip, it’s no fast bet. Doing so would be a major strategic initiative and require a heavy investment that could amount to hundreds of millions of dollars in costs every year. The move also doesn’t guarantee success; Meta's custom chip effort has been beset with issues, leading the company to scrap some of its AI chips. The Facebook owner is now working on a newer chip that will span all types of AI work. Producing a custom chip will take OpenAI several years to – including an acquisition - this still leaves OpenAI dependent on commercial providers like Nvidia and Advanced Micro Device in the meantime.
Nonetheless, there’s a big advantage to owning the whole stack from hardware to software - including the models that run on top. The move will give OpenAI greater control over scalability and reduce the company’s overall cost in the long run (estimated to be $700,000 a day earlier this year). Right now, AI chip panic is hurting OpenAI’s scaling ambitions and it has plenty of $ in the can ($11 billion and $ 1 billion annual revenue) to invest in R&D. It’s a move that will set them apart and make them more “necessary’. They’d no longer be solely a software company but an enterprise company.
SO WHAT?
__ DO __ Expect knock-on effects like increased supply chain risks, cost inflation and bottlenecks while the chip shortage rectifies itself for OpenAI (and others) which ultimately will impact all users in multiple ways. Especially if costs go up because of rising hardware expenses. . // __ DON’T __ Ignore collaboration and alliances. Small businesses could collaborate to collectively negotiate and secure essential components, thereby leveraging economies of scale. Equally, using industry groups to strengthen bargaining power and get better insights might be a good move too,
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FTX co-founder Gary Wang testified in court, OpenAI is exploring making its own chips. X is still under massive issues, Flexport plans to lay off up to 30% of its workforce, Meta is paying several top creators millions of dollars each over multiple years for nonexclusive use of their likeness in its text-based AI characters, Some 4chan users are flooding the internet with racist images created using Bing's text-to-image generator powered by DALL-E, the SEC is suing Elon Musk, Microsoft rolls out a new version of Microsoft Teams, Amazon's Project Kuiper launched its first demo internet satellites, and Ofcom found that “hyperscalers” like AWS and Microsoft Azure are limiting competition in the UK's cloud market.
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