Sam Altman, the CEO of OpenAI, may be wondering who inside the company came up with the idea to name its first in-house chip "Jalapeño." A few months ago, this name probably seemed like a clever way to signal that the product would be a hot and spicy addition to the market. But the timing is now rather awkward: the U.S. Food and Drug Administration is currently dealing with a salmonella outbreak linked to contaminated jalapeño peppers, and officials have advised against eating, serving, or selling products containing them. OpenAI certainly does not want this situation to be a bad omen, and so far, things are not heading in a negative direction.
The AI firm revealed the initial benchmark results for its Jalapeño chip on Tuesday, claiming that the processor delivers a major performance leap: it can handle more AI computations per unit of power while also offering faster response times. Sam Altman took to X to announce: "We built a chip, and it is very fast." Semiconductor research firm SemiAnalysis also issued a report, stating outright that the Jalapeño chip "performs better than NVIDIA's Blackwell chip." This is undoubtedly a significant blow to NVIDIA, whose chips have long been the benchmark that the entire AI industry strives to match.
What makes this situation especially embarrassing for NVIDIA CEO Jensen Huang is the fact that NVIDIA is one of OpenAI's primary investors. NVIDIA has poured a staggering $30 billion into OpenAI. One of the key reasons NVIDIA invests in outside companies is to create demand for its own hardware. However, OpenAI has its own priorities. As previously reported, this custom chip, developed in collaboration with Broadcom, is designed to lower hardware expenses and boost OpenAI's profit margins. After all, NVIDIA's AI chips carry a hefty price tag.
And it is not merely a matter of procurement costs. OpenAI hopes that this chip, purpose-built for inference (running AI models), will operate with greater efficiency than NVIDIA's more general-purpose AI processors. Of course, OpenAI maintains that it will continue to purchase NVIDIA chips for both model training and inference workloads even after deploying Jalapeño. This is a familiar refrain, echoing what Amazon and Google have said: both tech giants heavily promote their own in-house AI chips while still offering NVIDIA chips to customers on their cloud platforms.
If NVIDIA's clients can easily substitute its chips with alternatives, Jensen Huang's position will become increasingly precarious. Perhaps he could remind everyone of the health risks associated with consuming jalapeño peppers.
Paramount's Next Strategic Move
California Attorney General Rob Bonta is actively pushing forward with a lawsuit. He has joined forces with attorneys general from 11 other states to file a suit attempting to block Paramount-Skydance's $110 billion acquisition of Warner Bros. Discovery. These state attorneys general seem to be stuck in a 1990s mindset. They argue that, if this deal goes through, Paramount would wield excessive market power in both the declining cable television industry and the movie business.
But these attorneys general should be reminded that the real battleground today is streaming video, not cable TV. And in the streaming arena, both Paramount and Warner are trailing behind dominant players like Netflix. Bonta's actions might actually end up doing Paramount CEO David Ellison a favor. For Paramount, the most advantageous scenario would be to offload the vast number of cable television channels that this acquisition would bring with it.
Furthermore, once this deal is completed, the combined entity will be saddled with $79 billion in debt. Selling off a collection of assets that are steadily declining would not be a bad outcome for the company. Ellison could easily align with Bonta's reasoning and work to divest as many cable channel assets as possible.