Why OpenAI’s Jalapeño Might Sicken Nvidia

Exactly who at OpenAI decided to name the company’s first internally designed chip Jalapeño? That might have seemed like a good idea a few months ago—perhaps OpenAI imagined that name would serve as a subtle indicator that the chip is a hot property. But it’s not ideal right now, when the Food and Drug Administration is warning that products containing jalapeños shouldn’t be eaten, served or sold thanks to a salmonella outbreak tied to the peppers.

OpenAI must be hoping that’s not an omen, and so far it doesn’t seem to be. The AI firm on Tuesday unveiled the first test results for Jalapeño, claiming the chip showed “a significant performance advance: Jalapeño can serve more AI work per unit of power while also returning responses more quickly.” OpenAI CEO Sam Altman tweeted that “we made a chip and it is fast.” AI research firm SemiAnalysis claiming that Jalapeño is “better than Nvidia Blackwell.” Ouch.

Nvidia chips are of course the ones to beat in AI. It must particularly gall Nvidia CEO Jensen Huang that he’s a major financial backer of OpenAI. Nvidia committed $30 billion to OpenAI just a few months ago. One of the reasons Nvidia invests money in companies is to underwrite demand for its products!

OpenAI has a different agenda. As we reported in this story earlier this year, developing its own chip—which it did in conjunction with Broadcom—is a way for it to reduce hardware costs and improve its margins. Nvidia’s AI chips are pricey, after all. And it’s not just about the cash outlays for chips. OpenAI also hopes a chip specially designed for inference—running AI models—will operate more efficiently than Nvidia’s more general-purpose AI chips.

OpenAI noted today that it would continue to use Nvidia chips for both training and inference once it deploys Jalapeño, of course. But that’s a bit like the statements we often hear from Amazon and Google, both of which talk up their own AI chips while also acknowledging that they make Nvidia chips available in their cloud units for customers. The more easily Nvidia’s customers can replace its chips with alternatives, the worse things are for Jensen Huang. Perhaps he should remind people of the health dangers of eating jalapeños.

Paramount’s Next Steps

California’s attorney general, Rob Bonta, is getting a lot of attention for the lawsuit he and 11 other state attorneys general filed to block Paramount Skydance’s $110 billion purchase of Warner Bros. Discovery. The state attorneys general are operating under the delusion that we’re still in the 1990s—they allege that Paramount would get too much power in the slowly dying cable television industry and the film industry.

Someone needs to remind the attorneys general that strength in streaming video, not cable, is what matters now, and in streaming both Paramount and Warner are behind leaders like Netflix.

It is possible Bonta is trying to do Paramount CEO David Ellison a favor. After all, the best thing for the company would be to jettison many of the cable channels it would inherit if the Warner deal goes through. And since Paramount is taking on a lot of debt—the combined business would have $79 billion of debt at closing—raising money by selling a few declining assets wouldn’t be a bad idea. Ellison should thank Bonta for the idea and dump as many cable channels as he can!

• LayerZero, a blockchain infrastructure startup that counts Citadel Securities, DTCC, and Intercontinental Exchange among its partners, said it’s launching a new blockchain-based exchange targeting financial institutions this fall.

• Zoom Communications reported 4.9% revenue growth for the July quarter, a slowdown from the 5.5% growth it reported in the April quarter, and projected an even slower growth rate for the current quarter.

• SpaceX announced on Tuesday its plans to build a $100 billion launch site for its Starship rocket on the coast of Louisiana. The company intends to begin construction in 2027 and is targeting 2029 for the first Starship launch from the site.

Today on The Information’s TITV

Check out today’s episode of TITV in which we speak with our Meta Platforms reporter about her scoop on the company’s forthcoming AI agent.