AMD has formalized a multi-year chip supply agreement with OpenAI that has the potential to generate tens of billions of dollars in revenue for the chipmaker, significantly accelerating its standing in the competitive AI industry.
Massive Compute Capacity and New GPU Technology
Under the terms of the deal, AMD has committed to supplying a colossal 6 gigawatts (GW) of compute capacity to OpenAI—an amount sufficient to power up to 4.5 million homes. This capacity will be delivered across multiple generations of AMD’s Instinct GPUs, starting with the Instinct MI450 GPU. OpenAI is scheduled to receive the first 1 GW of capacity in the second half of 2026, coinciding with the new chip’s planned deployment.
AMD claims that the upcoming MI450 series will outperform comparable offerings from Nvidia (specifically the Nvidia Rubin CPX) through hardware and software enhancements. Many of these improvements will be developed with direct input from OpenAI. AMD’s current MI355X and MI300X series GPUs are already recognized for their strong performance in large language model AI inference, largely due to their substantial memory capacity and bandwidth, and are currently employed in some of OpenAI’s workloads.
As a central component of the agreement, AMD has provided OpenAI with the option to purchase up to 160 million shares of AMD stock, which would amount to a 10% stake in the company. The vesting of this stake is tied to the chip supply schedule: the first tranche will vest with the initial 1 GW deployment, and subsequent tranches will vest as OpenAI purchases capacity up to the total 6 GW.
OpenAI’s stake is also linked to specific increases in AMD’s stock price, with the final tranche vesting only if the stock reaches $600 per share. For market context, AMD shares closed at $164.67 on Friday but opened Monday at $222.24, marking a jump of nearly 35% following the news of the deal.
OpenAI’s Infrastructure Race
This deal is the latest in a rapid series of chip partnerships OpenAI is securing as it races to build out its vast AI infrastructure. The company’s plans include the development of five new Stargate data centers, which are projected to have a combined capacity of 7 GW.
AMD Chair and CEO Dr. Lisa Su expressed enthusiasm for the partnership, stating, “This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world’s most ambitious AI buildout and advancing the entire AI ecosystem.” OpenAI CEO Sam Altman echoed this, calling the partnership “a major step in building the compute capacity to realize AI’s full potential.”
In the month prior to this agreement, OpenAI signed several other massive deals to lock in compute capacity: Nvidia agreed to invest up to $100 billion in OpenAI and supply at least 10 GW of power; OpenAI and Broadcom signed a $10 billion deal to develop and manufacture custom AI chips; and OpenAI announced the expansion of its Stargate initiative with Oracle and SoftBank. Just last week, OpenAI finalized agreements with Samsung Electronics and SK Hynix to source DRAM memory chips for the Stargate project and to assist in building data centers in South Korea.
The Era of Vertical Integration
The structure of this deal, which ties AMD’s massive chip supply directly to a substantial equity stake for OpenAI, marks a pivotal shift toward extreme vertical integration in the AI industry. OpenAI is not merely buying hardware; it is strategically fusing its fate with its suppliers, creating deep financial incentives for AMD to prioritize OpenAI’s needs and accelerate its product roadmap. This move signals that in the race for AI dominance, simply having the best algorithms is no longer enough—companies must own or aggressively control their supply chain and compute infrastructure, turning chip suppliers into de facto partners in the intellectual property and financial success of the AI giant.
Featured image credit: Rubaitul Azad via Unsplash
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