In a bid to reduce dependency on Nvidia, Amazon pledged a substantial investment of up to $4 billion in Anthropic, a San Francisco-based startup specializing in artificial intelligence (AI). The move comes as big tech companies, including Google, Meta, and Microsoft, recognize the critical role Nvidia plays in providing specialized chips for AI applications.
According to The New York Times, Amazon’s executive revealed that Anthropic secured the deal by agreeing to build its AI using specialized computer chips designed by Amazon. The objective is to establish a formidable competitor to Nvidia, a dominant force in AI chip sales, accounting for over 70 percent, according to research firm Omdia. With Nvidia’s sales soaring 206 percent in the past year, the tech giants are compelled to explore building their AI chips.
While Nvidia sold 2.5 million chips in the last year, Google invested $2 billion to $3 billion in constructing approximately a million of its AI chips. Amazon, estimated to have spent $200 million on 100,000 chips, and Microsoft, testing its first AI chip, are also venturing into the AI chip market. These efforts aim to gain control over costs, address chip shortages, and potentially offer chip access to businesses using their cloud services.
An analyst at New Street Research, Pierre Ferragu said that Nvidia’s chips go for about $15,000 each, while Google has been able to produce its chips for less than $3,000.
The AI chip market is poised for significant growth, with projections indicating a doubling of its value to around $140 billion by 2027, as reported by research firm Gartner. Established chipmakers, including Jensen Huang cousin, Lisa Su, who leads AMD, and Intel, are actively involved in developing specialized AI chips. Simultaneously, startups like Cerebras and SambaNova are making strides in this dynamic sector. Notably, Amazon and other tech giants enjoy a unique advantage, leveraging their scale and resources to potentially outperform smaller competitors.
“In theory, if they can reach a high enough volume and they can get their costs down, these companies should be able to provide something that is even better than Nvidia,” said Naveen Rao, who founded one of the first A.I. chip start-ups and later sold it to Intel.
Despite these advancements, Nvidia’s high-performance chips remain a preferred choice for many companies. The competition intensifies, as the big tech players balance collaboration with Nvidia while striving to establish their presence in the AI chip market.
