OpenAI Selects Broadcom to Design Custom AI Chip, Intensifying Competition in Semiconductor Market
Broadcom (NASDAQ:AVGO) has secured OpenAI's contract to design its first custom AI inference chip called Jalapeno. This partnership positions Broadcom as a key player inside one of the largest potential silicon buyers globally. CEO Hock Tan revealed that Jalapeno is already being shipped and anticipates deployment at 1.3 gigawatts in 2027, with growth to over five gigawatts by 2028. OpenAI has also announced collaboration with Samsung on next-generation chips, though the extent of Samsung's involvement—whether design, fabrication, or memory—is unclear. Broadcom projects $115 billion in AI semiconductor revenue for fiscal 2027 and $230 billion in 2028, assuming continued strong customer relationships. Despite these positive developments, Broadcom’s stock has declined by over 13% in the past month as investors factor in uncertainty around Samsung's role. The company currently trades at a high valuation of 47 times trailing earnings.
Tickers: $AVGO
Topics: AI chips Broadcom OpenAI partnership Samsung