OpenAI Partners with Nvidia Rival Cerebras for $10 Billion Computing Pact

OpenAI has entered into a multi-year agreement with US-based chipmaker Cerebras to purchase up to 750 megawatts of computing capacity over 3 years. The contract is valued at more than $10 billion over its duration, as per Reuters. 

The capacity will be brought online in phases, with full rollout expected by 2028. 

Structure of the Deal 

Under the arrangement, Cerebras will build or lease data centres fitted with its own chips. 
OpenAI will not own the hardware and will instead pay to access computing power through Cerebras’ cloud services. The systems will be used to support OpenAI’s AI products, including its chatbot services. 

Focus on Inference Computing 

The computing capacity will be used mainly for inference, the stage where AI models respond to user queries. Inference requirements have increased as newer models are to carry out more complex reasoning tasks. OpenAI said the additional capacity would be used to improve response times across its products. 

How Talks Began 

Discussions between the 2 companies started in August last year. Cerebras demonstrated that OpenAI’s open-source models could run more efficiently on its chips than on conventional graphics processing units. Following several months of negotiations, the companies agreed on a cloud-based supply model. 

Cerebras Background 

Founded in 2015, Cerebras develops wafer-scale engine chips aimed at running large AI models. The company competes with firms such as Nvidia in supplying hardware for AI workloads. Sam Altman is an early investor in Cerebras. 

IPO-Related Developments 

The deal comes as Cerebras prepares another attempt at going public. Reuters reported that the company is targeting an initial public offering in the 2nd quarter of this year. Cerebras had earlier filed for an IPO in 2024 but withdrew the application in October. 

Broader Industry Backdrop 

OpenAI is also preparing for a possible stock market listing that could value the company at up to $1 trillion. Altman has said OpenAI plans to spend $1.4 trillion to develop 30 gigawatts of computing capacity, roughly equivalent to powering 25 million US homes. 

Conclusion  

The deal comes as both companies scale operations amid rising computing needs across the AI sector. It also coincides with Cerebras’ preparations for a potential public listing. 

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