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AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

reuters.com

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Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#151

Post by fauigerzigerk »

john-h-k wrote: post #22
theli0nheart wrote: post #8

> As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal. The warrant vests in tranches based on milestones that the two companies have agreed on. This is money printing, just in the private sector. We know what happens when governments do it, and it's not good.

It’s quite specifically not money printing, because it’s backed by something. It could be bad sure but it’s not money printing

You're right. It's not really money printing, at least not directly. Only banks can print money.

What these recent deals do is inflate asset prices by making (future) revenues appear higher or perhaps just more certain than they really are.

Assets can be used as collateral for loans. If someone were to use their AMD shares as collateral for a loan at a commercial bank (not a margin loan), that would be money printing and you could print more of it today than before the deal was announced.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#153

Post by DebtDeflation »

didibus wrote: post #146
DebtDeflation wrote: post #125

Earlier quoted context omitted.

Not really. This is AMD investing in OpenAI (albeit in an unusual way, with stock options) not the reverse. Same as the Nvidia deal. Same as hyperscaler investment in OpenAI and Anthropic. The people selling stuff to the AI Labs are the same ones funding them.

I can't figure who is actually investing in who? OpenAI may own 10% of AMD, and that seems like OpenAI investing in AMD in exchange for buying 6GW of GPUs and 160million in stock.

OpenAI isn't giving AMD money to get AMD stock. AMD is giving OpenAI its stock (in the form of a call option with a $0.01 strike).

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#154

Post by nemomarx »

jakewins wrote: post #135
CyanLite2 wrote: post #124

Earlier quoted context omitted.

On the flip side of it (and where most institutional investors are mentally) is that if OpenAI is to ever achieve AGI, it must invest nearly a trillion dollars towards that effort. We all know LLMs have their limitations, but next phase of AI growth is going to come from OpenAI, Anthropic, Google, maybe even Microsoft, and not some stealth startup. E.g., Only Big Tech can get us to AGI due to sheer massive amounts of…

That “only big tech can solve AGI” bit doesn’t make sense to me - the scale argument was made back when people thought just more scale and more training was gonna keep yielding results. Now it seems clear that what’s missing is another architectural leap like transformers, likely many different ones. That could come from almost anywhere? Or what makes this something where big tech is the only potential source of inno…

If it comes from anywhere else but it needs a lot of capital to execute, big tech will just acquire them right? They'll have all the data centers and compute contracts locked up I guess.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#155

Post by [deleted] »

nerdix wrote: post #10

The title didn't make this obvious (at least not to me) but it's OpenAI that has the option to buy 10% of AMD. Not the other way around. In case you're wondering how OpenAI could afford to buy 10% of AMD while they are hemorrhaging money -- the terms of the deal allows OpenAI to buy 160 million shares at 1 cents a share. I could be thinking about this the wrong way but it appears that AMD is basically subsidizing the…

[deleted]

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#156

Post by lacker »

alberth wrote: post #126
yousif_123123 wrote: post #39

Earlier quoted context omitted.

I think at least part of the 10% is if AMD stock reaches 600. Not that I disagree that this looks weird. Why was that needed to be offered? Couldn't they just buy the AMD chips if they're good enough? Or Nvidia is it's better? I also don't get why there commiting so much to the future, are they sure of the quality of the products and their demand that much?

> allows OpenAI to buy 160 million shares at 1 cents a share. > I think at least part of the 10% is if AMD stock reaches 600. AMD market cap today is $350B (at $200/share). AMD would need to 3x their market cap ($1,000B) to be at $600/share. Which would mean that OpenAI could gain $100B in AMD stock, for the minuscule cost of only $1.6 million (160 million shares at 1 cent each). -- Sam is spinning the world on his f…

> Sam is spinning the world on his finger tip with these deals he's crafting.

That was my reaction too, this sort of weird deal seems very Sam Altman style.

Like Elon Musk - ironically, the archenemies are very stylistically similar.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#157

Post by HarHarVeryFunny »

nerdix wrote: post #10

The title didn't make this obvious (at least not to me) but it's OpenAI that has the option to buy 10% of AMD. Not the other way around. In case you're wondering how OpenAI could afford to buy 10% of AMD while they are hemorrhaging money -- the terms of the deal allows OpenAI to buy 160 million shares at 1 cents a share. I could be thinking about this the wrong way but it appears that AMD is basically subsidizing the…

AMD is giving OpenAI warrants (cf options) to buy AMD shares at 1c/share, but these only vest if OpenAI goes thru with AMD purchases as intended.

It seems to basically give OpenAI an incentive to go thru with the deal.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#159

Post by j4hdufd8 »

wqaatwt wrote: post #123
j4hdufd8 wrote: post #94

Earlier quoted context omitted.

> A tax on the mistaken believe that NVidia has an monopoly on putting transitions in a particular configuration which they obviously don't NVIDIA doesn't place transistors in particular configurations. Foundries do that for them. And it is currently common sense that the software is the moat, not the hardware design. Good luck changing the ecosystem to use AMD.

> that the software is the moat, not the hardware design. For inference that’s hardly relevant, though? For training its not exactly insurmountable either.

GPUs are also used to speed up inference (the math is virtually the same). You think your ChatGPT queries are running on x86 servers?

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#160

Post by colordrops »

nerdix wrote: post #10

The title didn't make this obvious (at least not to me) but it's OpenAI that has the option to buy 10% of AMD. Not the other way around. In case you're wondering how OpenAI could afford to buy 10% of AMD while they are hemorrhaging money -- the terms of the deal allows OpenAI to buy 160 million shares at 1 cents a share. I could be thinking about this the wrong way but it appears that AMD is basically subsidizing the…

Hopefully part of the contract is that OpenAI must make any software frameworks they build to utilize AMD GPUs open source.
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