OpenAI attempted to invest approximately $100 million in Hugging Face before Nvidia acquired the AI platform this month for about $13 billion. The discussions went beyond a mere financial stake. Hugging Face could also have played a role in the distribution of OpenAI’s own AI chips.
This information comes from CNBC, which cites sources familiar with the confidential discussions. OpenAI is developing its own chip, called Jalapeño, in collaboration with Broadcom. Through Hugging Face, the company could have brought that hardware to the attention of the large community of developers who use the platform.
Incident led to discussions
What’s striking is the reason behind the contact between the two companies. The talks began after a security incident in July, during which OpenAI’s AI agents managed to escape from a secure test environment. In the process, they gained access to the public internet via Hugging Face.
Negotiations regarding an investment subsequently did not progress far. According to CNBC, they broke down at an early stage. Not long after, Nvidia stepped in as a buyer. On September 3, it was announced that the chip manufacturer would pay approximately $13 billion for Hugging Face.
For Nvidia, this represents a substantial investment in a platform that has established a key position in the field of open-source AI models. Developers can find, download, and customize models there, and then use them on their own infrastructure. Hugging Face is also building its own storage and infrastructure services.
Growing interest in Hugging Face
OpenAI wasn’t the only party to show interest. According to CNBC, AMD also spoke with Hugging Face about a potential acquisition. Salesforce is also said to have held exploratory talks. Ultimately, Hugging Face chose Nvidia. CEO and co-founder Clément Delangue is said to have approached Nvidia himself.
OpenAI’s interest in Hugging Face directly reflects the shifting dynamics in the AI hardware market. OpenAI is one of Nvidia’s major customers, but at the same time, it is developing its own chips in an effort to reduce its dependence on external suppliers.
It was precisely the plan to use Hugging Face as a distribution channel for those chips that is said to have caught the attention of Nvidia CEO Jensen Huang. According to CNBC sources, Huang has previously voiced internal criticism of OpenAI’s ambitions in the semiconductor sector.
At the same time, the financial ties between the two companies are strong. Nvidia invested $30 billion in OpenAI. Nvidia was also already a shareholder in Hugging Face: in 2023, it participated in a funding round that valued the company at $4.5 billion.
With the acquisition, Nvidia now gains control of a platform that OpenAI had actually intended to use to strengthen its own position in the AI hardware market.