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If Amazon Web Services has its way, the cloud giant is going to push even deeper into Nvidia\u2019s market, in what might be one of the biggest challenges to Nvidia\u2019s AI chip dominance we\u2019ve seen so far.<\/p>\n
Amazon\u2019s AI chief Peter DeSantis told Bloomberg<\/a> that AWS is in talks to sell its AI chip Trainium to other companies for use in data centers. DeSantis declined to specify which companies could be the buyers of these chips.<\/p>\n Such talk about selling chips is in the early stages, the company tells TechCrunch. They stem from Amazon CEO Andy Jassy\u2019s annual shareholder letter<\/a> in early April, in which he said the company\u2019s homegrown AI chips were so coveted that he was thinking about selling them:<\/p>\n If our chips business was a standalone business, and sold chips produced this year to AWS and other third parties (as other leading chips companies do), our annual run rate would be ~$50 billion.\u00a0There\u2019s so much demand for our chips that it\u2019s quite possible we\u2019ll sell racks of them to third parties in the future.<\/p>\n<\/blockquote>\n How much of a challenge could Amazon be to Nvidia? A $50 billion competitor wouldn\u2019t exactly tank Nvidia \u2014 which is currently on a $326 billion revenue run rate \u2014 if it keeps delivering quarters like the last one<\/a>. But it\u2019s akin to Intel\u2019s annual revenue<\/a>.<\/p>\n AWS has so far resisted selling its AI chips for a lot of reasons. The biggest is that the money AWS actually makes on its chips is a waterfall effect. Sure, it charges customers directly for the AI tokens those chips process on its cloud, but it also gets to charge for a host of other services companies need for their AI apps, including storage, security, networking, and monitoring services.<\/p>\n Equally important, Amazon has touted the capacity of its chips has been selling out faster than it can produce them. In that same shareholder letter in April, Jassy said<\/a> the current Trainium chip capacity had sold out almost instantly. So, too, he said, had the capacity for the next one, Trainium4, which won\u2019t even be available for more than a year. This was before AWS formally added OpenAI to the models it was serving up<\/a>.<\/p>\n So selling its chips to others means it would likely have to leave current customers on waiting lists, unless it could somehow manufacture a surplus of chips through its manufacturing partners such as TSMC. But it would have to miraculously elbow Nvidia out of the way to do that with TSMC, which has recently supplanted Apple<\/a> to become the foundry\u2019s largest customer.<\/p>\n AWS spokesperson Doron Aronson (who hosted me during a recent private tour of the AWS chip design facility<\/a>) also confirmed that AWS may sell these chips. \u201cWhile we\u2019ve historically declined requests to sell chips directly, Andy noted it\u2019s quite possible we\u2019ll sell racks of them to third parties in the future.\u201d<\/p>\n So while Nvidia\u2019s founder and CEO Jensen Huang recently declared that he\u2019s found a brand-new $200 billion market for Nvidia<\/a> in selling CPUs for AI, not just GPUs \u2014 thereby moving into Intel and AMD territory \u2014 Jassy clearly has his own chip ambitions: a $50 billion market that would put elbow more directly into Nvidia\u2019s world.<\/p>\n<\/div>\n When you purchase through links in our articles, we may earn a small commission<\/a>. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n\n