Broadcom seeks over $50B to fund OpenAI chips, WSJ says

The Wall Street Journal News Corp ↗ 0.28% reports that Broadcom ↗ 0.39% is putting together more than $50 billion in financing for the custom AI chip it is building with OpenAI. If completed, the deal would be one of the largest debt packages yet raised to pay for AI hardware.bloomberg+1

The Journal cited people familiar with the talks and said Broadcom has been working on the deal for the past few weeks. Apollo Global Management ↗ 2.91% and Blackstone ↗ 1.43% are among the lenders discussing a role in it, Bloomberg reported, citing the Journal's story. The Journal described the effort as part of a wave of large debt deals that Oracle ↗ 4.21%, Broadcom and SpaceX are pursuing to pay for AI chips.wsj+1

Building on the Anthropic model

The talks follow a structure Broadcom set up with the same two asset managers in June. On June 9, Broadcom announced the "AI XPV Platform," with Apollo and Blackstone's Credit & Insurance business as anchor investors. Its stated aim is to support more than 20 gigawatts of computing capacity using Broadcom's custom XPUs and networking gear for "leading frontier AI labs, including Anthropic and OpenAI, through 2028". The platform started with a $35 billion tranche, led by Apollo, to fund more than 1 gigawatt of new computing capacity for Anthropic at sites run by Fluidstack.reuters+1

In that first deal, investors paid for chips that were placed in a special-purpose vehicle and leased to Anthropic. If Anthropic stopped paying and the hardware could not be sold for enough to cover the debt, Broadcom agreed to make up the shortfall on the senior tranches.rebellionresearch

A crowded pipeline

The OpenAI financing is separate from another large Broadcom deal already in progress. In August, Bloomberg News reported that Broadcom was in talks with lenders to raise more than $60 billion in debt for an AI chip deal benefiting Anthropic and other companies. That report said the total could reach about $100 billion once a possible junior tranche of roughly $30 billion was included, and that Blackstone and Apollo were also in talks to take part. In early October, Bloomberg reported that Broadcom's Wall Street syndicate had started gathering that $60 billion.finance.yahoo+1

These deals let AI developers get chips without paying for the hardware upfront. They also let Broadcom keep much of the borrowing off its own balance sheet, although it still carries guarantee obligations. According to the reports cited here, the terms of the OpenAI financing are still under negotiation, and none of the companies has publicly confirmed the deal.bloomberg+3