Why OpenAI’s “Jalapeño” chip will hit Nvidia hard

Abstract:

Who within OpenAI decided to name the company’s first self-developed chip

Jalapeño

? A few months ago, the name might have sounded like a good idea—OpenAI wanted to use the name to hint that this was a hot, blockbuster product. But it’s a bit out of place now: the U.S. Food and Drug Administration is experiencing a salmonella food safety incident. The contaminated pepper is the Mexican pepper. Official requirements

Do not eat, supply or sell food containing this pepper

.

OpenAI CEO Sam Altman

OpenAI certainly doesn’t want this to be an ominous omen, and so far, things are not going in a bad direction. The AI ​​company announced the first measured results of the Jalapeño chip on Tuesday, claiming that the chip achieved a

major performance breakthrough: it can handle more AI operations per unit of power consumption and respond faster

. OpenAI CEO Sam Altman posted on the . This is undoubtedly a heavy blow to Nvidia.

Nvidia’s chips have always been the benchmark for the AI ​​industry to catch up with. What is particularly embarrassing for Nvidia CEO Jensen Huang is that Nvidia itself is a major investor in OpenAI. Nvidia has invested $30 billion in OpenAI. One of Nvidia's purposes for investing in external companies is to create demand for its own hardware.

But OpenAI has its own considerations. As previously reported, the purpose of this self-developed chip jointly developed with Broadcom is to

lower hardware expenses and increase its own profit margin

. After all, Nvidia’s AI chips are priced high. And it's not just a matter of acquisition cost: OpenAI hopes that this chip, designed specifically for inference (running AI models), will run more efficiently than Nvidia's general-purpose AI chips.

Of course, OpenAI stated that after deploying Jalapeño, the company will continue to purchase Nvidia chips for model training and inference business. This statement is exactly the same as the statements of Amazon and Google: both giants vigorously promote their own self-developed AI chips, and will also provide Nvidia chips to customers on their own cloud platforms. Once Nvidia's customers can easily replace Nvidia chips with other products, Huang's situation will become increasingly difficult. Maybe he can remind the world of the health risks of eating jalapenos.

Paramount’s next plan

California Attorney General Rob Bonta is actively pursuing a lawsuit. He joined 11 other state attorneys general in filing a lawsuit seeking to block Paramount‑Skydance's $110 billion acquisition of Warner Bros. Discovery.

It seems like these state attorneys general are still thinking in the 1990s. They claimed that after the acquisition is completed, Paramount will hold too much market power in the declining cable television industry and the movie industry.

But a word of caution to these attorneys general: The real battleground today is streaming video, not cable TV. On the streaming media track, both Paramount and Warner lag behind leading rivals such as Netflix.

Bonta's move may be a favor to gang Ramon CEO David Ellison. The most beneficial situation for Paramount is to get rid of the large number of cable channels that this acquisition will take over. And after the transaction is completed, the combined entity will be saddled with $79 billion in debt; selling a group of assets that continue to decline is not a bad thing for the company. Ellison can completely follow Bonta's thinking and divest all cable channel assets as much as possible.