The vertical integration allows them to corner the market and destroy the competition or prevent them from entering the market, which is bad for the consumer and bad for society, eventually.
Let's instead go back to when we actually enforced the anti-trust laws that we have. That was nice.
Ideally what we would see is OpenAI investing in a new but independently operated chip manufacturer that makes chips to their standards. Though is it also possible that a chip of such standard would be so specialized that it wouldn't be usable by others? I'm not a hardware person, so that's a genuine question.
That's competition. Apple Silicon completes with Intel at an ecosystem level.
Because anything to do with hardware, particularly anything with silicon, has immense startup costs.
As of today, I say if they go into consumer market they will fail.
If they go into specialised server chips, then they would have a chance, with some sort of accelerator over some arm-based chip - similar to what Nvidia is doing with Grace. Still big money to be spent on supporting the existing ecosystem on their hardware.
OpenAI wanting to vertically merge to make their own AI chips may seem harmless enough (it's a good business move, we can cut expenses)! But we can't forget that Sam Altman just a few months ago told Congress he supports making an organization that companies need permission from to being creating/utilizing advanced AI systems. And he's such a kind man he's willing to lead that organization himself.
Obviously someone integrating the chips to train AI, and having the ability to approve/deny his own competition is a huge red flag.
NVidia has a near monopoly on the AI hardware market right now, so some vertical integration of alternative AI hardware doesn't seem nearly as big if a deal if it is needed to fight that current monopoly.