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

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

#271

Post by jpadkins »

andrewstuart wrote: post #56
thejohnconway wrote: post #31

Earlier quoted context omitted.

> But Lisa Su can’t bring herself to compete. Which is very strange because she brutally competed with and destroyed Intel. Maybe making cutting-edge GPUs is actually quite an engineering challenge, and not entirely down to the competitive will of the CEO?

AMD already make GPUs that are competitive with Nvidia at every tier except the very top end. It’s the positioning and pricing that isn’t competitive.

You think Nvidia's advantage on LLM is hardware? It's the software ecosystem around the GPU (that Nvidia took a decade+ to build) that is the advantage.

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

#272

Post by HarHarVeryFunny »

ptero wrote: post #243
NaomiLehman wrote: post #239

Earlier quoted context omitted.

AMD cards are good for inference or new low-level stuff anyway and more cost-effective. it's a good deal for everyone.

AMD has great hardware, but its software still leaves a lot to be desired for AMD to be a major AI hardware player. It takes years of unwavering leadership focus and hundreds of millions (probably billions) of dollars to get the software that works well for AI users. The role the software played to get NVIDIA from a run-of-the-mill video card manufacturer to the top dog in AI hardware with 4T market cap is often unde…

AMD being able to benefit from AI, and this OpenAI relationship, is a bit different though. This is about using AMD hardware for training and presumably inference of LLMs. The users will be people consuming OpenAI APIs and services running on AMD hardware, not people themselves writing custom ML applications using AMD libraries.

Maybe also worth noting that some of the worlds largest supercomputers (e.g. Oak Ridge "Frontier" exascale computer) are based on AMD AI processors - I've no idea what drivers/libraries are being used to program these, but presumably they are reliable. I doubt they are using CUDA compatibility libraries.

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

#273

Post by lesuorac »

gowld wrote: post #258
lesuorac wrote: post #209

Earlier quoted context omitted.

The CEO of Tesla, Elon Musk, was sued over an extremely similar situation. So somebody will care. That said, this is really about the principal. Sure, if I give you $10 and you give me a hamburger it's not like some illegal transaction. But to say the $10 comes from thin air is wrong. It doesn't come from thin air. I would bet that if one day OpenAI decided to sell 10% of AMD the stock would crash from $600 to below…

What Musk suit are you talking about? The rest of your comment doesn't make sense.

His 56 billion pay package [1]. In order for him to receive it the stock would need to increase 13x [2] (the AMD stock increase from 150 to 600 is only 4x). Despite succeeding at doing that, he and Tesla were sued over the pay package.

If OpenAI fails then its going to have to liquidate the company. Selling 160M shares of AMD is going to tank it's price.

[1]: https://en.wikipedia.org/wiki/List_of_lawsuits_involving_Tes...

[2]: https://ir.tesla.com/press-release/tesla-announces-new-long-...

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

#274

Post by lumost »

fancyfredbot wrote: post #260

This $100bn deal didn't cost anything and isn't worth anything. Remember back two weeks ago when Nvidia gave OpenAI $100bn so they can keep buying Nvidia GPUs? This is AMD trying to do the same, but they don't have $100bn so they are offering OpenAI share options to buy GPUs. The share options will be worth at least $100bn too, if the conditions are met. But meeting the conditions will require buying huge numbers of…

This depends significantly on the real cost of the gpu. The cost of enterprise ai GPUs is likely 2 orders of magnitude lower than the current list price. These deals avoid the need to markdown the price of the hardware to gain volume.

If I understand the math correctly. Amd could offer the GPUs at around a 20x discount to OpenAI on a deal worth 10-20 billion and be profitable on both amortized R&D and Cost of Goods sold.

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

#275

Post by jpadkins »

alberth wrote: post #9
didntknowyou wrote: post #4

they're just printing money for each other at this point

Some refer to it as "circular financing". It's "seller financing" but to a degree we've never seen before in an industry (which create these "circular" effects). There's a good HN thread from 2-days ago on this subject (200+ comments). https://news.ycombinator.com/item?id=45473033

The real, sustained value creation for AMD is if their GPUs can be competitive with Nvidia for inference or training. The market is currently betting that AMD will get that "spillover" effect from working with OpenAI to get their chips + software in a state that openAI can use at scale.

So day 1 valuation is mostly hype, but that hype may translate into real value later.

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

#276

Post by SirMaster »

blihp wrote: post #254
SirMaster wrote: post #132

Earlier quoted context omitted.

Is there any real reason AMDs market cap can't be close to what Nvidia's is? Or like even half of what Nvidia's is?

Try to use AMD GPU's for AI and you'll understand. Unless you have lots of your own engineers to throw at making their stuff work, it's easier for most companies just to keep throwing money nVidia's way.

I understand that it's that way today. But I am talking about "potential". If OpenAI and AMD engineers get their heads together and make some new software etc, couldn't AMD in theory become as valuable as Nvidia or at least half as valuable?

It seems like to take a 350M market cap company to 2B+ or a 6x+ increase in stock price would be worth doing for a few hundred million dollar investment in software and such?

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

#277

Post by jasonwatkinspdx »

hristov wrote: post #270
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…

It sure seems that way. The stock options are worth, at the current price of AMD stock, about 32.8 Billion dollars. AMD is giving out these stock options essentially for free in exchange of open ai purchasing chips from AMD. So open ai are getting a 32.8 billion dollars rebate. But on what? Here the press releases are a bit vague. They say that Open ai committed to buying six gigawatts of AMD chips. Anybody know how…

> They say that Open ai committed to buying six gigawatts of AMD chips. Anybody know how to convert that into money?

MI350 spec sheet says it's 1000 watts typical. So we're talking about something on the scale of a couple million chips.

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

#278

Post by mNovak »

hristov wrote: post #270
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…

It sure seems that way. The stock options are worth, at the current price of AMD stock, about 32.8 Billion dollars. AMD is giving out these stock options essentially for free in exchange of open ai purchasing chips from AMD. So open ai are getting a 32.8 billion dollars rebate. But on what? Here the press releases are a bit vague. They say that Open ai committed to buying six gigawatts of AMD chips. Anybody know how…

I figure these GPUs are typically around 1kW (unclear if 6GW is including overhead like cooling, which might double(?) the power), so in the range of 3-6M GPUs.

If these are somewhere in the range of $10-30k (who knows what current or future models are contemplated), that's $30-180B. So clearly the low end doesn't make sense for the 'rebate', but at the high end a ~17% discount doesn't seem unreasonable.

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

#279

Post by lumost »

This seems to be OpenAI's path to victory in the AI race. Buy up the supply chain of compute to the extent that no other competitor could possibly have access to the same compute. If they are able to shut out Google/X.AI from the market, there really aren't any viable firms to keep financing next generation models on a pure compute scaling basis. I'm leaving out Anthropic as they don't appear to be as compute focused as X/OpenAI/Google. It's unclear if compute is the sole determiner of AI leadership in the long term or just a contributor.

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

#280

Post by wmf »

lesuorac wrote: post #273
gowld wrote: post #258

Earlier quoted context omitted.

What Musk suit are you talking about? The rest of your comment doesn't make sense.

His 56 billion pay package [1]. In order for him to receive it the stock would need to increase 13x [2] (the AMD stock increase from 150 to 600 is only 4x). Despite succeeding at doing that, he and Tesla were sued over the pay package. If OpenAI fails then its going to have to liquidate the company. Selling 160M shares of AMD is going to tank it's price. [1]: https://en.wikipedia.org/wiki/List_of_lawsuits_involving_T…

I think there's a covenant preventing OpenAI from dumping AMD shares on the open market. Obviously AMD's price will move down during the crash but at least the shares will be liquidated in an orderly fashion.
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