Turning the chip crisis into an opportunity

OpenAI, which already lowered the barriers in artificial intelligence in just a year after the introduction of the easily-accessible generative AI service ChatGPT, is out on another ambitious quest of doing the same for high-performance chips to change the landscape in the global chip market. The big-tech war over chip supremacy could threaten or widen the horizon for Korean chipmakers depending on their response.

According to the Financial Times, the Wall Street Journal and other foreign media outlets, OpenAI CEO Sam Altman is in talks with multiple investors to raise $5 trillion to $7 trillion to establish its own capacity to design and produce AI chips powerful enough to train machines for human-like performance. Its astronomical funding target can bring about seismic changes to the global chip market whose annual revenue last year amounted to $527 billion.

Although the investment details remain unknown, OpenAI could be looking to leverage oil money to finance its ambitious initiative, as Altman reportedly met Sheikh Tahnoun bin Zayed al Nahyan, the National Security Advisor of the United Arab Emirates (UAE) and brother of UAE President Sheikh Mohamed bin Zayed al Nahyan. Sheikh Tahnoun bin Zayed al Nahyan also serves as chairman of G42, a technology group aimed at inventing visionary artificial intelligence.

OpenAI is out to broaden its business portfolio to hardware components out of frustration over the lagging supply pace and expensive prices of chips capable of powering AI performance. The complaint over the growing reliance on Nvidia for graphics-processing units, or GPUs — essential for AI computation — also played a part in OpenAI’s endeavor to expand its portfolio. Nvidia has so far been unable to meet the explosive demand for AI chips due to the broadening application of AI across industries.

Korean chipmakers could be winners if they can ride on the OpenAI-led alliance. But prospects are not all rosy. Taiwan Semiconductor Manufacturing Co. (TSMC), the dominant foundry player, is beefing up its production capacity through an alliance with Japan over a $20 billion project to build a second plant in Japan. TSMC chose Japan for its overseas chip base thanks to the government’s incentive of subsidizing up to half the construction cost and Japan’s labor cost being much cheaper than in the United States.

Other governments are also offering aggressive incentives for their chipmakers and foreign companies. Korea could lose its hard-won chip supremacy and fall back in the new playing field if it dilly-dallies on investing in the AI technology. The government must do its utmost to help local companies survive and win the competition against global chipmakers.