Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

reuters.com

Post reply on HN
Print view View original

311–320 of 390 posts

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

#311

Post by zerosizedweasle »

coliveira wrote: post #288
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…

It seems that these American companies have decided, with the government blessing, to form a cartel to split the imaginary money they assume will exist for AI technologies. This is an extremely disturbing notion that will only increase the combined power of these tech companies over our daily lives, but may also spell the doom of the economy in a not-so-distant future.

But also under the assumption that the taxpayers will bail them out and foot the bill when things go wrong. Privatize the gains, socialize the losses. This is completely on the assumption that the US government would be able to do this, despite the bond market, inflation, debt that would constrain any response.

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

#312

Post by throwaway2037 »

HarHarVeryFunny wrote: post #157
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.

Can someone with banking / deal-making experience explain to me how this warrant works? My point: If OpenAI exercises the warrant and buys 10% of AMD for 1 penny per share, where does AMD get the shares? Or will they do a secondary offering and dilute existing shares? Or do they take from treasury holdings (of shares)? Or does AMD coordinate a buyback of shares, then deliver to OpenAI?

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

#313

Post by mmmBacon »

joenot443 wrote: post #297
coliveira wrote: post #288

Earlier quoted context omitted.

It seems that these American companies have decided, with the government blessing, to form a cartel to split the imaginary money they assume will exist for AI technologies. This is an extremely disturbing notion that will only increase the combined power of these tech companies over our daily lives, but may also spell the doom of the economy in a not-so-distant future.

Fully anecdotal, but nearly every knowledge worker I know has Copilot or ChatGPT or some kind of corporate LLM subscription included in their job now. I don’t think the majority use it very well, but I know at least a handful who do. Corporate America seems ready to spend real money on AI, at least for now. This money being spent today doesn’t come close to recouping the investment OpenAI et al have made, but the tri…

I am personally paying $200/month for the ChatGPT pro version. It’s the best investment I’ve made in my career in a long time. It’s like having 2-3 direct reports. The alternatives provided by my companies are too slow and aren’t anywhere as good. If people start using it anywhere near how I’m using it, there will be profound changes to the workplace in the coming 3 years.

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

#314

Post by PessimalDecimal »

didntknowyou wrote: post #306
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…

it kinda worked in a way. AMD offered OpenAI 160 million stock options. With AMD's stock jump today it's net worth increased about $35billion, close enough in value to those stocks option they gave away (if it was redeemed instantly). It's too much of a coincidence so I'm guessing market makers and institutional shareholders priced it in their trading today.

If a company gave away some portion of is assets, shouldn't its market cap go _down_ by that amount not up? That's how stocks trade ex dividend e.g.

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

#315

Post by the-grump »

noir_lord wrote: post #249
ptero wrote: post #243

Earlier quoted context omitted.

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 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. It does but they have a capable CEO with a vision and broad support from the board - Ryzen was a decade long over night success.

I'm in no position to judge the current CEO, but the Zen credit goes to

- Rory Read, under whom the program started

- Jim Keller who ran the program

- the engineers and managers who put the sweat in

- and, one must never forget, a rotating cast of executives and board members at Intel

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

#316

Post by doodlebugging »

coliveira wrote: post #287
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…

This is money from nothing, right? They just found the tree of money.

To paraphrase Dire Straits - The money from nothing and the chips for free.

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

#317

Post by TacticalCoder »

throwaway2037 wrote: post #312
HarHarVeryFunny wrote: post #157

Earlier quoted context omitted.

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.

Can someone with banking / deal-making experience explain to me how this warrant works? My point: If OpenAI exercises the warrant and buys 10% of AMD for 1 penny per share, where does AMD get the shares? Or will they do a secondary offering and dilute existing shares? Or do they take from treasury holdings (of shares)? Or does AMD coordinate a buyback of shares, then deliver to OpenAI?

[dead]

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

#318

Post by doodlebugging »

jpadkins wrote: post #269
tanh wrote: post #69

I don't know why Bloomberg TV are asking where this money comes from for OpenAI. It comes from the AMD stock holders. If the AMD stock pumps then OpenAI gets free money to buy more, without giving up equity. If it doesn't then OpenAI just walk away.

specifically, it's coming from new AMD stock holders that are buying shares at much higher than current prices. And those shareholders are buying a company that they value more because AMD is better positioned in the LLM market because of the side effects of the OpenAI integration. Existing AMD shareholders are getting a great deal; their shares are worth 30% more today and will be worth 5X more if OpenAI gets to use…

>Existing AMD shareholders are getting a great deal; their shares are worth 30% more today and will be worth 5X more if OpenAI gets to use their option. Yes, there is some dilution for existing shareholders, but only after a 5X gain.

So if I read this right then an existing shareholder benefits up to the point where AMD stock reaches the $600/shr level and after that it becomes a dilution.

For the maximum benefit to existing shareholders, the stock price must get near $600/shr and if that looks unlikely they should consider other investments on less speculative terms. This whole AI thing feels like I'm watching the soapy fluid flow along the bubble exterior to form a droplet of soap on the bottom, thinning and weakening the bubble until it pops due to fluid film rupture at the top of the bubble as the droplet leaks away due to gravity.

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

#320

Post by phkahler »

wmf wrote: post #282
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…

if OpenAI don't find a profitable use for them then both their stock price, and AMD's will go down. Nah, nothing in the current market is based on fundamentals.

>> Nah, nothing in the current market is based on fundamentals.

Sure it is. Stock prices are based on supply and demand. Oh, did you mean company fundamentals? Hmm.

BTW that demand is all coming from 401k contributions. The powers that be are terrified of a downturn causing too many job losses tanking the whole thing.

Post reply on HN