Microsoft’s plan to fix its chip problem is, partly, to let OpenAI do the heavy lifting

Microsoft is addressing its semiconductor challenges by leveraging its partnership with OpenAI, which is developing custom AI chips in collaboration with Broadcom. Under a revised agreement, Microsoft has secured intellectual property rights to OpenAI’s chip designs and will have access to these innovations, allowing it to adopt and extend the technology for its own use. This move comes as Microsoft’s chip efforts have lagged behind competitors like Google and Amazon, making the partnership a pragmatic solution to accelerate its AI hardware capabilities. CEO Satya Nadella emphasized that Microsoft benefits from OpenAI’s system-level innovations, gaining a significant advantage without bearing the full burden of chip development. The agreement also grants Microsoft continued access to OpenAI’s AI models through 2032, though OpenAI retains exclusive rights to its consumer hardware products. This collaboration highlights the complexity and cost of building advanced AI chips, with Microsoft opting to rely on OpenAI’s expertise and a strategic contract to bolster its position in the AI hardware space.