Nvidia Corp is building a new business unit focused on designing bespoke chips for cloud computing firms and others, including advanced artificial intelligence (AI) processors, nine sources familiar with its plans told Reuters.
The dominant global designer and supplier of AI chips aims to capture a portion of an exploding market for custom AI chips and shield itself from the growing number of companies pursuing alternatives to its products.
The Santa Clara, California-based company controls about 80 percent of the high-end AI chip market, a position that has sent its stock market value up 40 percent so far this year to US$1.73 trillion after it more than tripled last year.
Nvidia’s customers, which include ChatGPT creator OpenAI, Microsoft Corp, Alphabet Inc and Meta Platforms Inc, have raced to snap up the dwindling supply of its chips to compete in the fast-emerging generative AI sector.
The firm’s H100 and A100 chips serve as a generalized, all-purpose AI processor for many of those major customers, but the tech companies have started to develop their own internal chips for specific needs. Doing so helps reduce energy consumption, and can potentially shrink the cost and time to design.
Nvidia is now attempting to play a role in helping these companies develop custom AI chips that have flowed to rival firms such as Broadcom Inc and Marvell Technology Group Inc, the sources said.
“If you’re really trying to optimize on things like power, or optimize on cost for your application, you can’t afford to go drop an H100 or A100 in there,” Eclipse Ventures LLC general partner Greg Reichow said in an interview. “You want to have the exact right mixture of compute and just the kind of compute that you need.”
Nvidia does not disclose H100 prices, which are higher than for the prior-generation A100, but each chip can sell for US$16,000 to US$100,000 depending on volume and other factors. Meta plans to bring its total stock to 350,000 H100s this year.
Nvidia officials have met with representatives from Amazon.com, Meta, Microsoft, Google and OpenAI to discuss making custom chips for them, two sources familiar with the meetings said. Beyond data center chips, Nvidia has pursued telecom, automotive and video game customers.
Dina McKinney, a former Advanced Micro Devices Inc and Marvell executive, heads Nvidia’s custom unit and her team’s goal is to make its technology available for customers in cloud, 5G wireless, video games and automotives, a LinkedIn profile said. Those mentions were scrubbed and her title changed after Reuters sought comment from Nvidia.
According to estimates from research firm 650 Group’s Alan Weckel, the data center custom chip market will grow to as much as US$10 billion this year, and double that next year.
The broader custom chip market was worth roughly US$30 billion last year, which amounts to roughly 5 percent of annual global chip sales, according to Needham & Co analyst Charles Shi.
Currently, custom silicon design for data centers is dominated by Broadcom and Marvell.
In a typical arrangement, a design partner such as Nvidia would offer intellectual property and technology, but leave the chip fabrication, packaging and additional steps to Taiwan Semiconductor Manufacturing Co (台積電) or another contract chip manufacturer.
Nvidia moving into this territory has the potential to eat into Broadcom and Marvell sales.
“With Broadcom’s custom silicon business touching US$10 billion, and Marvell’s around US$2 billion, this is a real threat,” SemiAnalysis founder Dylan Patel said. “It’s a real big negative — there’s more competition entering the fray.”
Nvidia is in talks with telecom infrastructure builder Ericsson AB for a wireless chip that includes the chip designer's graphics processing unit technology, two sources familiar with the discussions said.
Weckle expects the telecom custom chip market to remain flat at roughly US$4 billion to US$5 billion a year.
Nvidia also plans to target the automotive and video game markets, according to sources and public social media postings.
Weckel expects the custom auto market to grow consistently from its current US$6 billion to US$8 billion range at 20 percent a year, and the US$7 billion to US$8 billion video game custom chip market could increase with the next-generation consoles from Microsoft and Sony Group Corp.
Nintendo Co's current Switch handheld console already includes Nvidia's Tegra X1 chip. A new version of the Switch console expected this year is likely to include a Nvidia custom design, one source said.
Intel Corp has landed Microsoft Corp as a customer for its made-to-order chip business, marking a key win for an ambitious turnaround effort under chief executive officer Pat Gelsinger. Microsoft plans to use Intel’s 18A manufacturing technology to make a forthcoming chip that the software maker designed in-house, the two companies said at an event on Wednesday. They did not identify the product, but Microsoft recently announced plans for two homegrown chips — a computer processor and an artificial intelligence (AI) accelerator. Intel has been seeking to prove it can compete in the foundry market, where companies produce custom chips for clients. It
The arrival of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in Japan’s Kumamoto Prefecture marks the regaining of the area’s pivotal position established during the Meiji Restoration in the 19th century, a local business leader said in an interview with CNA. The first fab of Japan Advanced Semiconductor Manufacturing Inc (JASM), TSMC’s majority-owned manufacturing subsidiary in Kumamoto, is set to open today. After the 1868 Meiji Restoration, Kumamoto was of key importance as it was home to a major garrison national defense. However, that position was ceded to Fukuoka after World War II as Japan turned to foreign trade for post-war economic development,
AI EFFECT: Nvidia CEO Jensen Huang moved up to 21st on the Bloomberg Billionaires Index on Thursday after his wealth skyrocketed by US$9.6 billion to US$69.2 billion The artificial intelligence (AI) mania sparked by Nvidia Corp’s sterling results has given a lift to Asia’s major chipmakers, but it has not closed the valuation gap with their US peers. A Bloomberg gauge tracking Asia’s top semiconductor firms, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co, widened its under-performance against the Philadelphia Semiconductor Index this week. While the Asian index trades at 17 times forward earnings, the US measure is at 27 times, pushing the gap close to a record after Nvidia’s blowout revenue outlook reinforced investor conviction in the boom in generative AI use. Nvidia’s 8 percent
The sound of gentle tapping filled a jewelry workshop in southern China as a craftsman hammered pine-leaf patterns onto a soft slab of gold in the style of old ink paintings. Elaborate traditional pieces created by master goldsmiths have always been popular in China, bought as gifts for special occasions such as the Lunar New Year or simply as investments. But jewelers are now having to consider a new and fast-growing consumer base — younger people, who are increasingly keen to buy gold, seeing it as a safe investment in uncertain economic times. Key to gold’s popularity is China’s lackluster post-COVID-19 recovery, which