Amazon Could Supply Trainium Chips to OpenAI in $10 Billion Funding Talks

Amazon Eyes Major Investment In OpenAI With Potential $10 Billion Deal

OpenAI, the developer of ChatGPT, is in advanced discussions with Amazon over a potential investment that could top $10 billion, according to sources familiar with the matter.

The deal, still fluid, could value the AI company at more than $500 billion, as it continues to prepare for a potential initial public offering that Reuters reported could reach up to $1 trillion.

Will Amazon Supply Chips And Cloud Capacity To OpenAI?

The talks are expected to include OpenAI using Amazon’s Trainium series of AI chips and renting additional data centre capacity to power its AI models, including ChatGPT.

Sources said the investment could pave the way for a broader fundraising round with other investors, although details remain confidential.

OpenAI has recently restructured its partnership with Microsoft, which owns a 27 per cent stake in the AI company and retains exclusive rights to sell its models to cloud customers.

The October restructuring allowed OpenAI to operate as a public benefit corporation controlled by a non-profit, giving it greater freedom to raise capital and strike deals with multiple infrastructure providers.

Is OpenAI Diversifying Its Infrastructure Partners?

OpenAI has already secured more than $1.4 trillion in infrastructure commitments from Nvidia, AMD, Broadcom, Oracle, and AWS.

Last month, the company signed a $38 billion server contract with Amazon, its first formal deal with the cloud leader.

The potential new investment would build on that arrangement, signalling OpenAI’s continued push to diversify its hardware and computing resources beyond Microsoft and Nvidia.

Microsoft, which has invested over $13 billion in OpenAI since 2019, no longer holds first refusal rights to provide compute, allowing the AI company to work with other providers.

The new discussions with Amazon come as the company seeks to expand its enterprise offerings, including ChatGPT integrations with Amazon’s e-commerce platforms, though it is unclear whether the partnership would involve AI-powered shopping tools.

How Does This Fit Into Amazon’s AI Strategy?

Amazon has already invested at least $8 billion in Anthropic, a rival AI startup, while Nvidia recently committed up to $10 billion to the same company.

The potential deal with OpenAI would strengthen Amazon Web Services’ AI chips business, particularly its Trainium technology, which competes with Nvidia and Google’s Tensor Processing Units.

Amazon and OpenAI are also discussing a commercial tie-up for e-commerce applications.

OpenAI has existing agreements with Etsy, Shopify, and Instacart to explore AI solutions in retail, and a partnership with Amazon could further expand its presence in the sector.

Are Investors Concerned About Complex Deal Structures?

Some investors have expressed caution over OpenAI’s complex web of investments and infrastructure agreements.

The AI company has taken stakes in some of its suppliers while receiving major investments from others.

Tech executives, including OpenAI CEO Sam Altman, have continued with aggressive dealmaking, emphasising the potential growth from large language models.

While Microsoft retains exclusive rights to OpenAI’s most advanced models until the early 2030s, the company’s new agreements with Amazon and other partners reflect a broader strategy to diversify both funding and technology sources as it scales its AI offerings.