Amazon hopes to challenge Nvidia more directly by selling its own AI chips

If Amazon Web Services succeeds in its goal, the cloud giant will penetrate deeper into Nvidia’s market, in what could be one of the biggest challenges to Nvidia’s AI chip dominance we’ve seen yet.

Amazon AI chief Peter DeSantis He told Bloomberg AWS is in talks to sell its Trainium AI chip to other companies for use in data centers. DeSantis declined to identify companies that could be buyers of these chips.

Such talks about selling the chips are still in their early stages, the company tells TechCrunch, and stem from statements by Amazon CEO Andy Jassy. Annual shareholder letter In early April, he said the company’s homegrown AI chips were so desirable that he was considering selling them.

“If our chip business were an independent business, and we sold chips produced this year to AWS and other third parties (as other leading chip companies do), our annual run rate would be ~$50 billion. There is such high demand for our chips that it is entirely possible that we will sell racks of them to third parties in the future.”

How big of a challenge could Nvidia take on Amazon? A $50 billion competitor wouldn’t destroy Nvidia — which currently has a revenue run rate of $326 billion — If it continues to deliver quarters like last quarter. But it looks like Intel’s annual revenue.

AWS has so far resisted selling its AI chips for many reasons. The biggest is that the money AWS actually makes from its chips is the waterfall effect. Sure, it charges customers directly for the AI ​​code that those chips process on its cloud, but it also charges for a host of other services that companies need for their AI applications, including storage, security, networking, and monitoring services.

Equally important, Amazon touted that its chip capacity was selling out faster than it could produce it. In the same April shareholder letter, Gacy said The existing Trainium chip capacity sold out almost immediately. He also said we have the potential for the next release, Trainium4, which won’t even be available for over a year. This was before AWS OpenAI has officially added to the models it was serving.

So selling its chips to others means it will likely have to leave existing customers on waiting lists, unless it can somehow manufacture surplus chips through its manufacturing partners like TSMC. But it would have to miraculously push Nvidia out of the way to do so with TSMC, which recently… Replace Apple To become the largest customer of the foundry.

AWS spokesperson Doron Aronson (Who hosted me during a recent private tour of the AWS chip design facility) also confirmed that AWS may sell these chips. “While we have historically declined requests to sell chips directly, Andy noted that it is very possible that we will sell shelves of them to third parties in the future.”

So, while Nvidia founder and CEO Jensen Huang recently announced this It found a new $200 billion market for Nvidia In selling AI CPUs, not just GPUs — thus moving into Intel and AMD territory — Jassy clearly has his own chip ambitions: a $50 billion market that would put the elbow squarely in Nvidia’s world.