Vertical integration is already under scrutiny by the antitrust folks. Even more so now after everything Google was able to get away with.

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.

Well kind of. You are ignoring the elephant in the GPU hardware room right now, which is NVidia.

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.

That's true, but again, him attempting to put himself as the gatekeeper of who can and cannot train/utilize advanced AI systems at scale gives him (almost) unilateral control over Nvidia's own AI chip manufacturing business. Deny startups the ability to train AI systems, and you deny Nvidia the opportunity to sell them their chips. Nvidia loses that revenue stream and stops producing AI chips due to high production costs and "lack" of demand. Ultimately leading to a market where only the obscenely wealthy companies who can manufacturer their own in-house chips can train AI, and even then, Sam Altman can deny even that.