Amazon in talks to invest $10 billion in OpenAI and supply its Trainium chips
Amazon is in talks with OpenAI to invest $10 billion in the company while providing more of its AI chips and cloud computing services, according to The Financial Times. The deal would raise OpenAI’s valuation to more than $500 billion, but would likely raise more questions about the company’s circular investment deals involving chips and data centers.
The two companies are also in talks about OpenAI helping Amazon with its online marketplace, similar to deals with Etsy, Shopify and Instacart. However, any deal would still not allow Amazon to market OpenAI’s most advanced models on its developer cloud platform, as Microsoft has exclusive rights to them until the 2030s.
OpenAI recently restructured its agreement with Microsoft to allow it to use data center capacity from other providers. Around the same time, the company struck a series of deals with NVIDIA, Oracle, AMD and others to boost data center capacity and acquire or lease AI chips.
The new deal would require OpenAI to use Amazon’s Trainium AI chips and lease more data center capacity from Amazon Web Services (AWS). This is on top of the $38 billion OpenAI has already committed to leasing servers from AWS over the next seven years.
These transactions have raised alarms among investors given their circular nature. In many of them, including this latest deal with Amazon, OpenAI takes the investment money and then sends that money back to the same company for the infrastructure or chips. And the amounts are staggering, with just two companies, Softbank and Oracle, spending a combined $400 billion on new data centers for OpenAI’s computing needs. And so far, OpenAI has lost more money than it has made.
