OpenAI is in discussions with Broadcom Inc. (NASDAQ:AVGO) to co-develop a new AI chip. This move is aimed at reducing the company's dependency on Nvidia Corp. (NASDAQ:NVDA) and strengthening its supply chain.

What Happened: OpenAI, co-founded and led by Sam Altman, is in talks with Broadcom and other semiconductor designers to enhance the supply of components and infrastructure required for running advanced AI models, reported the Financial Times on Thursday.

These discussions are part of Altman's strategy to secure the necessary resources for the company's AI models. "The limiting factor of AI is capacity: chip capacity, energy capacity, compute capacity. [OpenAI] is not just going to sit back and let others build [that] when they are on the front line," said a person with knowledge of OpenAI's plans, according to the report.

Altman has worked with chipmakers, partners like Microsoft Corp. (NASDAQ:MSFT), government agencies, and financial backers to increase capacity and maintain his company's central role in the technology boom ignited by the launch of ChatGPT in late 2022.

"OpenAI is having ongoing conversations with industry and government stakeholders about increasing access to the infrastructure needed to ensure AI's benefits are widely accessible," OpenAI said in a statement. "This includes working in partnership with the premier chip designers, fabricators and the brick and mortar developers of data centers."

Broadcom did not immediately respond to Benzinga's request for comment.

Why It Matters: This development comes on the heels of OpenAI's efforts to secure funding for a network of semiconductor factories to address chip shortages for AI applications. Altman has been in talks with global investors, including Abu Dhabi-based AI company G42 and Softbank Group Corp, to secure funds for this initiative.

Despite the backing of Microsoft, OpenAI may need additional financial support or commercial partnerships to bring its plans to fruition, according to the report.

OpenAI's move to develop its own AI chip with Broadcom comes amid significant competition and investment in the AI sector. Recently, Altman emphasized his unwavering commitment to developing artificial general intelligence (AGI), regardless of the financial cost.

"Whether we burn $500 million, $5 billion, or $50 billion a year, I don't care," he said.

Moreover, the AI landscape is becoming increasingly competitive. For instance, Anthropic, an AI startup backed by Jeff Bezos, and Menlo Ventures have launched a $100 million fund to support early-stage AI startups. This initiative aims to provide financial backing and access to Anthropic's AI technology, further intensifying the competition with OpenAI.

Price Action: Broadcom's stock closed at $160.52 on Thursday, up 2.91% for the day. In pre-market trading, the stock was up 1.48%. Year to date, Broadcom's stock has risen by 47.89%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote