Apparent collapse of Nvidia–OpenAI tie-up raises questions about circular funding and who will bear the cost of AI’s expansion
Did the circular AI economy just wobble? Last week it was reported that a much-discussed $100bn deal – announced last September – between Nvidia and OpenAI might not be happening at all.
This was a circular arrangement through which the chipmaker would supply the ChatGPT developer with huge sums of money that would largely go towards the purchase of its own chips.
It is this type of deal that has alarmed some market watchers, who detect a whiff of the 1999-2000 dotcom bubble in these transactions.
Now it seems that Nvidia was not as solid on this investment as had been widely believed, according to the Wall Street Journal. Negotiations had not progressed, with Jensen Huang, Nvidia’s chief executive, privately emphasising that the deal was “non-binding” and “not finalised”. Huang appeared to confirm this in Taipei on Saturday, telling reporters that Nvidia would make a “huge” investment into OpenAI’s next funding round, but “nothing like” $100bn.
