OpenAI Bets $10 Billion on Cerebras Chips in Move Beyond Nvidia

TLDR

• OpenAI signed a deal worth over $10 billion with AI chipmaker Cerebras to deliver up to 750 megawatts of computing power through 2028.
• The agreement helps Cerebras diversify away from G42, which made up 87% of its revenue in the first half of 2024.
• Cerebras withdrew its IPO paperwork in October 2024 but plans to refile with updated financial information.
• The deal allows OpenAI to expand beyond Nvidia chips and aims to make ChatGPT responses faster with lower latency.
• Talks between the companies began in August after Cerebras demonstrated efficient performance with OpenAI’s open-source models.

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OpenAI has committed to a major computing deal with AI chipmaker Cerebras Systems. The agreement calls for Cerebras to provide up to 750 megawatts of computing power to OpenAI through 2028.

The contract is valued at more than $10 billion. This makes it one of the largest infrastructure deals in the AI industry.

OpenAI will use Cerebras technology to run its AI products, including ChatGPT. The company says the partnership will enable faster responses and more natural interactions for users.

Sachin Katti, who works on compute infrastructure at OpenAI, said Cerebras adds a dedicated low-latency inference solution to their platform. This means the AI models can respond more quickly to user requests.

The deal provides OpenAI with an alternative to Nvidia chips. Nvidia currently dominates the AI chip market and became the first company to reach a $5 trillion market value in October.

Cerebras makes large wafer-scale processors that handle AI tasks differently than traditional graphics processing units. The company’s chips can process work without requiring thousands of smaller chips to work together.

For Cerebras, the OpenAI contract represents a major step in expanding its customer base. CEO Andrew Feldman said the company previously relied heavily on one large customer and is now adding a second.

G42, a tech group based in the United Arab Emirates, accounted for 87% of Cerebras revenue in the first half of 2024. The OpenAI deal helps reduce this dependence.

Deal Background

Talks between OpenAI and Cerebras started in August. The discussions began after Cerebras showed that OpenAI’s open-source models could run efficiently on its hardware.

OpenAI tested Cerebras chips as early as 2017. Emails from litigation between Sam Altman and Elon Musk revealed this early evaluation.

In 2018, Musk attempted to purchase Cerebras. Feldman said they believed the offer was connected to Tesla at the time.

The two companies signed a term sheet just before Thanksgiving. Cerebras will build or lease new data centers to host its chips for OpenAI.

Financial Picture

Cerebras filed for an IPO in September 2024. The company reported revenue of about $70 million in the second quarter of 2024, up from roughly $6 million a year earlier.

The company’s net loss grew to almost $51 million from $26 million in the same period. Cerebras withdrew its IPO paperwork in October after raising $1.1 billion in funding at an $8.1 billion valuation.

Feldman said the company pulled the filing because details were out of date. He plans to refile with updated financial information and strategy details.

The 750-megawatt capacity equals the power of several large data centers combined. This computing capacity will help OpenAI manage the costs of running complex AI systems.

OpenAI CEO Sam Altman has said the company may invest up to $1.4 trillion to build 30 gigawatts of computing power in coming years. The Cerebras deal represents an early step in that expansion.

Cerebras has data centers in the United States and abroad. The company will continue expanding its facilities with the OpenAI commitment.

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