• by Laurie Sullivan  @lauriesullivan, January 19, 2024

OpenAI CEO Sam Altman wants to address the semiconductor chip shortage he expects to arrive at the end of the decade, and is looking to raise billions of dollars in capital for a chip venture.

The plans -- which now reveal the focus and the scope of the project -- would begin with setting up a network of chip fabrication facilities similar to companies like Texas Instruments. There they would design and manufacture semiconductors to support artificial intelligence and the boom in server capacity that the industry expects.

Abu Dhabi-based G42 is one of the firms in which Altman has held discussions with, reports Bloomberg. Some people named SoftBank Group, according to Bloomberg, citing people familiar with the conversation.

The processing power will be required by advertising and marketing companies working with AI to do everything from design creatives to serve ads, and more.

Building and maintaining a fabrication facility is far more ambitious a strategy than outsourcing the projects to a third-party company similar to Amazon, Google, and Microsoft.

Google, for example, reportedly co-designs its AI chips with Broadcom, a semiconductor firm that also provides wireless chips for Google phones and chips for its cloud services. 

Meta Platforms also works with Broadcom and Nvidia on custom AI chips. Meta CEO Mark Zuckerberg announced Thursday on Instagram Reels that the company’s two major AI research groups, FAIR and GenAI, are being combined to advance efforts and accelerate the work.

“We’re building a massive amount of infrastructure,” Zuckerberg wrote on Instagram.

At the end of the year, Meta estimates having 350,000 Nvidia H100s, graphics processing unit (GPU) chips designed for AI and, overall, 600,000 H100 and H100 equivalent amounts of computing power when including GPUs.

“We expect investors to increasingly focus on the R in ROI of generative AI investment, and thus how META (and others) will generate revenue from these investments,” wrote Dan Salmon, analyst at New Street Research in a note published Friday. “We see several promising generative AI-related opportunities at META.”

Those opportunities include ad supported AI agents like the Sponsored Links in SNAP’s My AI, which could turn into a more than a $6 billion advertising opportunity by 2025.

Other opportunities include a potential enterprise of small and medium size paid targeting in a new subscription revenue stream leveraging, in part, WhatApp’s distribution and central role in global small-scale commerce. Generative AI tools that improve advertising performance, and enhanced creator content generation tools to improve the metaverse engagement capabilities, and wearable devices like the Ray-Bans.