Sector Spotlight: Nvidia to invest up to $100B in OpenAI

Welcome to the latest edition of “Sector Spotlight,” where The Fly looks at a new industry every week and highlights its happenings.

SEMICONDUCTOR NEWS: The Trump administration is planning to ask chipmakers to produce domestically as many semiconductors as their customers import, in an effort to reduce reliance on overseas supply, the Wall Street Journal’s Amrith Ramkumar reported, citing people familiar with the matter. The administration expects to levy tariffs on firms that do not sustain a 1:1 ratio over time.

In addition to Apple (AAPL), Intel (INTC) has also recently approached TSMC (TSM) over a potential investment or manufacturing partnership, the Wall Street Journal’s Lauren Thomas and Rolfe Winkler wrote. Intel has been winning support from other tech giants following the agreement that gave the U.S. government a 10% interest in the semiconductor maker.

Qualcomm (QCOM) announced Snapdragon X2 Elite Extreme and Snapdragon X2 Elite, the next-generation premium-tier platforms within the Snapdragon X Series portfolio. The company said, “With superior performance, multi-day battery life and groundbreaking AI, these new processors are the fastest, most powerful and efficient processors for Windows PCs, the company said. Snapdragon X2 Elite Extreme is built for ultra-premium PCs, tackling agentic AI experiences, computationally intense data analytics, professional media editing and scientific research.”

Cadence (CDNS) announced major advancements in chip design automation and IP, driven by its long-standing relationship with TSMC to develop advanced design infrastructure and accelerate time to market, for AI and HPC customer applications. Cadence and TSMC have collaborated closely across the spectrum from AI-driven EDA to 3D-ICs to IP and photonics, enabling the world’s most advanced semiconductors. Cadence and TSMC have partnered on AI-driven design solutions for joint customers, enabling chip development with optimal power, performance and area in TSMC N2. TSMC has enabled Cadence JedAI Solution, Cadence Cerebrus Intelligent Chip Explorer’s AI-driven implementation technology and productivity features powered by Innovus+ AI Assistant within Cadence’s digital full flow. Additionally, TSMC has validated new AI-driven features, such as automated design rule check violation fixing assistance, enabling faster design closure and greater efficiency in the development of AI chips using TSMC N2.”

Intel (INTC) has approached Apple about an investment in the troubled chipmaker as part of efforts to turn around a business that’s now partially owned by the U.S. government, Bloomberg’s Ryan Gould and Liana Baker reported. The two companies have also discussed how to work more closely together, the authors say, noting that the talks have been early-stage and may not result in a deal. Shares of Intel were up 6.8% after the report.

Marvell Technology (MRVL) announced that its board has authorized a new $5B stock repurchase program. As of August 2, the company had approximately $2B remaining under its prior repurchase authorization. Since then, Marvell has repurchased $300M of common stock in the current quarter under its regular program. In addition, the company has entered into an accelerated share repurchase agreement with a leading financial institution to repurchase $1B of its common stock.

AMD (AMD) announced it is expanding its global collaboration on multiple fronts with Cohere (COHR). Cohere customers will have access to AMD Instinct GPU-powered infrastructure for Cohere’s full suite of AI offerings, including Command A, Command A Vision, Command A Translate and North. “We are excited to further expand our relationship with AMD with the availability of many of our models and North on AMD Instinct GPUs. Given public and private sector customers the ability to deploy our full suite of technology across our foundational models and security-optimized enterprise AI products gives them significantly greater flexibility in how they choose to deploy Cohere’s AI,” said Nick Frosst, co-founder, Cohere. “AMD has a compelling TCO proposition with its AI infrastructure and is a great option for sovereign AI initiatives in Canada and globally.”

Alibaba (BABA) is integrating Nvidia’s (NVDA) AI development tools for physical AI into its cloud software platform, Luz Ding of Bloomberg reported. Alibaba’s Cloud Intelligence unit will offer customers the ability to employ Nvidia’s tools in building AI.

Applied Materials (AMAT) announced a strategic collaboration with GlobalFoundries (GFS) to establish a waveguide fabrication facility at GF Singapore to accelerate the emerging photonics inflection driven by AI. Applied Materials will develop waveguide components with GF as its high-volume manufacturing partner in Singapore, leveraging decades of semiconductor expertise.

Microsoft-backed (MSFT) OpenAI and Nvidia (are in talks over an unusual way to structure their new AI data center partnership, under which the ChatGPT maker would lease Nvidia’s AI chips rather than purchase them, The Information’s Anissa Gardizy and Sri Muppidi wrote, citing two people who spoke to executives at the companies about it.

OpenAI and Nvidia announced a letter of intent for a landmark strategic partnership to deploy at least 10 gigawatts of Nvidia systems for OpenAI’s next-generation AI infrastructure to train and run its next generation of models on the path to deploying superintelligence. To support this deployment including data center and power capacity, Nvidia intends to invest up to $100B in OpenAI as the new Nvidia systems are deployed. The first phase is targeted to come online in the second half of 2026 using the Nvidia Vera Rubin platform, the companies stated. “OpenAI will work with Nvidia as a preferred strategic compute and networking partner for its AI factory growth plans. OpenAI and Nvidia will work together to co-optimize their roadmaps for OpenAI’s model and infrastructure software and Nvidia’s hardware and software. This partnership complements the deep work OpenAI and Nvidia are already doing with a broad network of collaborators, including Microsoft, Oracle, SoftBank and Stargate partners, focused on building the world’s most advanced AI infrastructure. OpenAI has grown to over 700 million weekly active users and strong adoption across global enterprises, small businesses and developers. This partnership will help OpenAI advance its mission to build artificial general intelligence that benefits all of humanity. Nvidia and OpenAI look forward to finalizing the details of this new phase of strategic partnership in the coming weeks,” the companies added.

The Technology Innovation Institute, the applied research arm of Abu Dhabi’s Advanced Technology Research Council, has joined forces with Nvidia to launch the Middle East’s first Joint Lab dedicated to both artificial intelligence and robotics. This collaboration establishes a hub in the region for developing next-generation AI models, robotics platforms, and humanoid technologies that will accelerate innovation across industries, TII and Nvidia said in a statement. The TII-NVAITC Joint Lab will integrate NVIDIA accelerated computing platforms and expertise with TII’s multidisciplinary research in AI, robotics, autonomous systems, and high-performance computing. It is the first NVAITC lab established in the Middle East, marking a significant milestone for the region. Together, the two organizations will accelerate the development of intelligent systems with real-world applications – advancing the field of Physical AI through embodied AI models, state-of-the-art robotics and humanoid stacks, and hardware designed for real-time robotic systems. Research will span robotic learning and control at scale, as well as the development and integration of large language models, including TII’s Falcon family of AI models – among them the Middle East’s first and largest AI models.

ANALYST COMMENTARY: Amid media reports this morning that suggest the Trump administration is considering a plan to institute a 1:1 ratio of U.S. and foreign made chips, with tariff penalties for offending suppliers, BofA said PC, phone, and server hardware vendors might face more of the market volatility since they are the ones that need to align with the potential new guidelines. Meanwhile, the firm expects the “usual US-concentrated manufacturers,” such as Intel, GlobalFoundries, Texas Instruments (TXN) and Micron (MU), to “see some stock boost,” though it thinks semicap equipment stocks “could be the real beneficiaries over time.”