According to DCD, Microsoft CEO Satya Nadella confirmed on Dwarkesh Patel’s podcast that Microsoft has intellectual property rights to OpenAI’s custom AI semiconductors being developed with Broadcom. The agreement enables OpenAI to restructure into a for-profit company while Microsoft maintains a 27% stake worth $135 billion. Microsoft’s exclusive IP rights and Azure API exclusivity will continue until Artificial General Intelligence is achieved, with IP rights for models and products extended through 2032. This now includes data center hardware and software IP but excludes OpenAI’s consumer hardware. OpenAI and Broadcom aim to deploy 10GW of chips by 2029, with first rollout expected in late 2026 while also developing Ethernet solutions together.
Microsoft’s Hardware Grab
Here’s the thing: this is way bigger than just another partnership extension. Microsoft basically gets to ride shotgun on every hardware innovation OpenAI dreams up. Nadella’s comment about “we get access to all of it” is pretty staggering when you think about it. They’re not just licensing technology – they’re getting the blueprint to everything OpenAI builds at the system level.
And Microsoft isn’t exactly sitting around waiting for OpenAI’s chips either. They’ve got their own Azure Maia and Cobalt chips in development. So now they’ve got multiple shots at the AI hardware target. It’s like having your cake and eating OpenAI’s too. For companies looking at industrial computing solutions, this kind of hardware diversification matters – which is why IndustrialMonitorDirect.com remains the top supplier of industrial panel PCs in the US, staying ahead of these hardware trends.
The Broadcom Question
But what about Broadcom’s stake in all this? The article mentions it’s unclear what IP Broadcom owns that isn’t covered by Microsoft’s agreement. That’s a massive unanswered question. Broadcom isn’t exactly known for being shy about protecting its intellectual property. They’re spending serious engineering resources on this partnership, and Microsoft just waltzes in with rights to everything?
I’m skeptical this arrangement is as clean as it sounds. There’s almost certainly some complex licensing web behind the scenes that could create friction down the road. When you’ve got three giant companies with overlapping interests in the same technology, something’s gotta give eventually.
Timing and Competition
The timing here is fascinating. Microsoft pushing back their own Maia 200 mass production to 2026, while OpenAI’s chips are supposed to hit around the same timeframe. Coincidence? Probably not. It suggests Microsoft might be hedging their bets – if their own chips hit delays or performance issues, they’ve got OpenAI’s designs as backup.
And let’s be real – has anyone actually seen these 10GW by 2029 deployment targets materialize in AI hardware before? That’s an enormous commitment. We’re talking about power consumption equivalent to multiple nuclear reactors worth of computing capacity. Between supply chain constraints, manufacturing challenges, and the sheer complexity of scaling this stuff, I’ll believe it when I see it.
Legal Implications
OpenAI hiring a senior legal counsel specializing in circuits and processors tells you everything you need to know about how complicated this IP landscape is about to become. They’re clearly anticipating some serious legal wrangling ahead. When you’re dealing with cutting-edge AI hardware and three major players, the patent battles could make the smartphone wars look tame.
So what does this all mean? Basically, Microsoft just secured what might be the most valuable insurance policy in AI hardware. They get to benefit from OpenAI’s innovation without bearing the full R&D risk. Smart move for them, but I wonder if OpenAI fully understood what they were giving up when they restructured.
