OpenAI’s Big AMD Deal

Oct 6, 2025 21m

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Episode Description

Another huge OpenAI deal, this time with AMD. The huge amount of chips Elon is buying for his Colossus II. It’s not just compute! How the AI boom is driving up prices for memory and storage chips. And does the math work out for those new fangled small nuclear reactors? AMD stock skyrockets 30% as OpenAI looks to take stake in AI chipmaker (CNBC) Elon Musk Gambles Billions in Memphis to Catch Up on AI (WSJ) AI data centers are swallowing the world's memory and storage supply, setting the stage for a pricing apocalypse that could last a decade (Tom's Hardware) OpenAI and Jony Ive grapple with technical issues on secretive AI device (FT) US and investors gambling on unproven nuclear technology, warn experts (FT) Learn more about your ad choices. Visit megaphone.fm/adchoices

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OpenAI and AMD's Major Partnership

In a groundbreaking move, OpenAI has struck a deal with AMD, potentially acquiring a 10% stake in the chipmaker. This deal will see OpenAI utilize AMD's instinct GPUs, starting with an initial rollout of one gigawatt in 2026. Analysts believe this strategic partnership not only solidifies AMD's position in the AI market but also alleviates supply chain pressures for OpenAI, traditionally reliant on Nvidia.

The AI Arms Race and Chip Demand

The podcast delves into the intense competition among AI companies to secure chip supply, with Elon Musk's XAI set to invest heavily in Nvidia chips for its Colossus 2 project. Musk’s outlay could surpass $18 billion for around 300,000 additional chips, underlining the high stakes involved in the AI sector. The discussion hints at the possibility that success in the AI race may hinge on who possesses the most computational power first.

Memory and Storage Prices Surge

The demand for memory and storage has skyrocketed due to the AI boom, leading to predictions of shortages lasting over a decade. OpenAI's Stargate project has secured a staggering agreement for 900,000 DRAM wafers per month, which would account for about 40% of global supply. Such extensive deals highlight the urgency for AI companies to lock in resources, drastically impacting consumer prices for related products.

Challenges of Small Nuclear Reactors for AI Power

The podcast also explores the viability of small modular reactors (SMRs) as a power source for AI data centers. Despite investments nearing $9 billion, the economics of SMRs suggest they may not be sustainable, with higher projected costs than conventional energy sources. This raises questions about the future feasibility of utilizing nuclear energy in powering the extensive infrastructure required by AI technologies.

Developments in OpenAI's Palm-Sized Device

OpenAI appears to be facing technical challenges in launching a compact, palm-sized AI device designed for interactive use. Despite ambitious plans developed in partnership with Jony Ive, issues related to software and required computational resources have led to delays. The initiative thus showcases the complexities involved in bringing advanced AI-based consumer products to market.