OpenAI finds optimization that halves inference costs

OpenAI engineers earlier this month developed an optimization that reduces inference costs by more than half for the models it has been applied to, according to a report by The Information. The breakthrough, which stems from squeezing more efficiency out of existing server resources rather than deploying additional chips, marks a notable advance in the economics of running large language models at scale.digg+1

A Software Fix, Not a Hardware One

After the optimization was applied to logged-out ChatGPT traffic, the number of GPUs needed to power that traffic dropped to just a few hundred, according to reporting surfaced on Monday. OpenAI's engineering team informed colleagues internally that the method primarily improves utilization efficiency of existing server infrastructure. The company has not publicly commented on the development.odaily+2

The cost reduction arrives as OpenAI faces mounting compute expenses. The company burned through $3.7 billion in the first quarter of 2026 alone, more than half of its $5.7 billion in revenue for the period, according to The Information. OpenAI is also pursuing hardware solutions in parallel — last week, the company unveiled Jalapeño, its first custom inference chip co-developed with Broadcom ↗ 4.00%, designed to deliver better performance-per-watt for language model applications.techcrunch+2

An Industry-Wide Race

The optimization sits within a broader competition among AI companies to drive down the cost of serving models to users. Anthropic has signed agreements for multiple gigawatts of next-generation TPU capacity from Google Alphabet Inc. ↗ 0.84% and Broadcom, with capacity expected to come online starting next year. Anthropic has also held early talks with London-based startup Fractile about purchasing specialized inference chips, though those are not expected to be commercially available until around 2027.reddit+2

The race to reduce inference costs has become a central concern across the industry, with enterprise AI budgets now dominated by inference spending. For OpenAI, which is projected to deplete $17 billion in cash in 2026, any method that halves the cost of serving its hundreds of millions of users could meaningfully alter its path toward profitability.economist+1