Broadcom is working to arrange more than $50 billion for an OpenAI chip

Broadcom has been working in recent weeks to arrange more than $50 billion in financing for a custom AI chip it is developing with OpenAI, the Wall Street Journal reported Wednesday, citing people familiar with the discussions. The Journal said the financing is expected to close before the end of the year.

Why a chip seller is arranging the money

Broadcom has done this before. On Tuesday, June 9, it set up a platform with Apollo Global Management and Blackstone as the lead investors, built to support more than 20 gigawatts of computing capacity through 2028 for labs including Anthropic and OpenAI. A gigawatt is a measure of electrical power, and these deals are sized by how much electricity the chip racks will draw.

The first sum was $35 billion, led by Apollo with Blackstone, for more than 1 gigawatt of Anthropic capacity. A financial partner buys the racks and leases them to the customer for five years once they are delivered. Broadcom's role is a backstop, a promise to cover the lease if the customer does not pay.

If the customer defaults, Broadcom owes the gap between 85% of what is still owed and what the racks would sell for. The company said that exposure tops out at about $29 billion once every rack is deployed. It has paid nothing under the promise.

On Monday, banks began offering a separate $60 billion financing for Anthropic's chip orders in 2027, with Broadcom set to backstop part of the debt so Anthropic can borrow more cheaply. The Journal left two things open on the OpenAI talks: whether they would use the June platform, and whether Broadcom would make the same promise.

As of August 2, Broadcom held $24 billion in cash and $57 billion of long-term debt. The sum being discussed is more than twice the cash. A guarantee, if Broadcom gives one, would lean on that cash and that debt.

S&P and Fitch rate Broadcom A-, an investment-grade rating that marks a relatively strong borrower, with a positive outlook, a sign the rating could go higher. On Thursday, June 11, Fitch left that rating in place after the first backstop, and said it would assess any further promise once the details are known.

Oracle and SpaceX are each seeking deals worth tens of billions of dollars to pay for AI chips, the Journal said. Apollo, Blackstone and Goldman Sachs are among the lenders in the talks.

For Oracle, investors would fund a separate company that buys the chips and leases them back. The debt would sit with that company rather than on Oracle's own books.

The chip the money is for

The partnership dates to October 2025, when OpenAI and Broadcom announced 10 gigawatts of custom accelerators and agreed in outline to deploy the racks. OpenAI designs the chips, and Broadcom develops and deploys them. The start was targeted for the second half of 2026, and completion by the end of 2029.

On Wednesday, June 24, the companies unveiled Jalapeño, OpenAI's first Intelligence Processor, and called it the first of several generations. OpenAI said in August that it still planned to begin deploying Jalapeño in its own data centers by the end of 2026, and that the chip was still being qualified for production.

The report came after the closing bell, so the live price is the midpoint of what buyers bid and sellers ask. As of 7:40 p.m. ET, that midpoint was $377.10, 0.16% above the regular-session close of $376.51.

What to watch, before the year-end close the Journal expects, is who borrows and whether Broadcom guarantees the payments the way it has for Anthropic.