Discussions underway regarding financing for OpenAI's custom chips; expanding collaborations between semiconductor suppliers and financial institutions. Oracle also in talks to secure funding for chip acquisitions, highlighting the diversification of financing strategies amidst surging infrastructure investment.
Broadcom is exploring a financing deal exceeding $50 billion related to custom artificial intelligence (AI) chips for OpenAI, The Wall Street Journal reported on the 7th (local time). While discussions are currently in the preliminary stages with firms such as Apollo Global Management and Blackstone, the final scope of the financing remains subject to change.
As the capital expenditure required to scale AI infrastructure balloons, the role of semiconductor suppliers is evolving. Beyond merely providing chips and network equipment, these firms are increasingly partnering with financial institutions to bridge the capital gap for their customers' facility investments.
In June, Broadcom established a platform with Apollo and Blackstone to support AI infrastructure investment. The initial $35 billion arrangement was designed to support the expansion of Anthropic’s computing infrastructure, exceeding 1 gigawatt (GW). This represents a collaborative model where technology providers and capital providers jointly underwrite a client's expansion plan.
The drive for such capital is fueled by the exponential growth in demand for AI semiconductors. In September, Broadcom reported that its AI semiconductor revenue for the third quarter of fiscal year 2026 reached $16.7 billion, a 221% increase from the same period last year. Driven by demand for custom AI accelerators and networking hardware, the company projects such revenue to reach $21.7 billion in the fourth quarter.
Oracle, a major consumer of these technologies, is also in talks with Apollo and Goldman Sachs to secure funding for its chip purchases, according to the WSJ. The proposed structure involves investors injecting capital into a special-purpose entity, which would then acquire the hardware and lease it back to Oracle. No definitive agreements have been finalized as of yet.
Oracle’s public earnings reports underscore the massive cash outlays required for infrastructure development. For the first quarter of fiscal year 2027, the company reported operating cash flow of approximately $23.1 billion, while capital expenditures hit $285 billion. This resulted in a negative free cash flow of roughly $5.4 billion. Oracle noted that it continues to prioritize investments to fuel the growth of its cloud infrastructure.
Equity issuance is another vehicle for securing capital. As part of its previously disclosed capital investment plan, Oracle raised $20 billion (gross proceeds) through the issuance of common stock during the same quarter.
Contractual structures where customers bear upfront equipment costs are also being utilized. During its March earnings call, Oracle explained that for many large AI contracts, most of the necessary equipment is either purchased via customer prepayments or provided directly to the company by the customer in the form of GPUs. In its September report, Oracle announced it had secured over $30 billion in new AI cloud contracts, stating that the structure of these agreements would not impose additional strain on its existing financing plans.
While the AI investment boom is driving top-line growth for chip suppliers, it necessitates significant upfront expenditure for infrastructure developers. To determine whether announced investment plans will translate into actual hardware orders and sustained service revenue, it is essential to scrutinize the scale of investment, the feasibility and terms of financing, and the underlying cash flow of the firms involved.
