NVIDIA's OpenAI partnership made headlines in the past few weeks, considering the monumental nature of the deal, but there's a background context to it that many are unaware of.
NVIDIA's CEO Found It an 'Absolute Priority' To Strike a Deal With OpenAI To Ensure Its Dominance in The AI Segment
[Update]: NVIDIA has reached out to us on this matter, claiming that the firm's investments don't bind partners to use native hardware. Here's a statement by Team Green's spokesperson:
We do not require any of the companies we invest in to use NVIDIA technology.
For those unaware, NVIDIA had recently entered into a 'mega deal' with OpenAI, where Jensen & Co. would invest $100 billion into the non-profit AI firm, and in turn, the AI giant would get 'millions' of AI chips, worth ten gigawatts of power. According to a report by the WSJ, the NVIDIA-OpenAI deal was stalled during initial talks in the summer. However, after OpenAI was rumored to integrate Google TPUs for AI workloads, NVIDIA's CEO rushed back to Sam Altman to secure the stalled deal. NVIDIA's direct investment was aimed at helping Altman get the required compute power, while keeping the firm's chips in the spotlight.
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
Well, Jensen was paying attention to the headlines around his company, it seems, and more importantly, the sudden change in stance clearly indicated that securing a deal with OpenAI was a top priority at that time, which is why the collaboration with the firm is one of NVIDIA's biggest deals yet. Since OpenAI is one of the largest AI firms, any collaboration involving Google's custom AI chips means that NVIDIA's tech stack has an alternative, and this is certainly not optimal for Team Green to maintain its AI dominance.
More importantly, the $100 billion investment appears to serve as a means for Team Green to gain access to OpenAI's computing portfolio, including AI lineups like Vera Rubin. So, Jensen essentially secured two objectives with this deal: first, it became one of the largest compute providers for OpenAI, and secondly, it also hinders the external adoption of Google's ASICs, as the chips are known to be a formidable rival to Team Green's hardware, according to Jensen himself.
The advantage that Google had is foresight. Remember they started TPU1 before everything started. Google is a big GPU customer… And so, and it’s a challenge for them as well… The work that they do is incredibly hard.
- Jensen Huang at BG2 podcast
It's still interesting to see how Big Tech deals with itself through a matter of headlines, and for NVIDIA, acting swiftly on such reports is necessary, since the firm needs to maintain its 'dominant status' in the AI industry.
News Source: @anissagardizy8
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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