NVIDIA CEO Jensen Huang Acted Quickly to Save Stalled OpenAI Deal from Collapse Amid Consideration of Google TPU Chips

In recent weeks, NVIDIA’s partnership with OpenAI has generated extensive media coverage, not just for its size but for its potential implications in the artificial intelligence landscape. However, many may not be fully aware of the critical background that led to this significant collaboration.

NVIDIA’s CEO Prioritized the OpenAI Deal to Secure AI Leadership

NVIDIA has recently engaged in a landmark agreement with OpenAI, which involves a staggering $100 billion investment by NVIDIA into the non-profit AI organization. In return, OpenAI is set to receive “millions”of AI chips, equivalent to ten gigawatts of processing power. According to a report by the WSJ, initial discussions for this deal faced delays during the previous summer. However, the situation shifted dramatically when rumors circulated that OpenAI might incorporate Google’s Tensor Processing Units (TPUs) for its AI operations. This prompted Jensen Huang, CEO of NVIDIA, to re-engage with Sam Altman and expedite discussions to finalize the agreement.

That spring, OpenAI also signed its first cloud contract with Google, raising the specter that it might begin using its chips as well.

After the story was published, Huang called Altman asking him if it was true, and signaled that he was open to getting the talks back on track, according to people familiar with the matter. Huang realized that Nvidia could help OpenAI by making a direct investment in the company, a person who spoke to him said.- WSJ

Jensen Huang’s keen awareness of industry developments underscores the urgency of cementing a partnership with OpenAI, a key player in the AI sector. This collaboration not only marks one of NVIDIA’s most substantial deals but also reinforces its strategic positioning against potential competition from Google’s AI innovations.

Person on stage holding a large NVIDIA chip with the text Grace on the screen behind. — Image Credits: NVIDIA

The $100 billion investment effectively creates a “supplier lock-in”for NVIDIA, establishing a dependency for OpenAI on NVIDIA’s hardware, potentially extending even to future Vera Rubin systems. This strategic move gives NVIDIA two key advantages: it positions the company as one of OpenAI’s largest computing providers and curtails the adoption of Google’s ASICs, which are recognized as formidable competitors to NVIDIA’s offerings.

The dynamics of how major technology companies navigate partnerships reveal much about industry trends. For NVIDIA, responding quickly to emerging headlines is crucial to maintaining its dominant role in the AI sector.

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