Nvidia, a dominant global designer of AI chips, is reportedly establishing a new business unit focused on designing customized chips for cloud computing companies and other applications, including advanced artificial intelligence processors. This strategic move aims to tap into the growing market for bespoke AI chips and safeguard Nvidia against increasing competition from companies exploring alternatives to its products.
While Nvidia currently commands around 80% of the high-end AI chip market, the company is looking to collaborate with cloud computing firms and assist them in developing custom AI chips. This initiative is in response to tech companies developing their own internal chips tailored to specific requirements, which can enhance energy efficiency and streamline design costs and time.
The new business unit, led by Dina McKinney, is reportedly engaging in discussions with major players like Amazon, Meta, Microsoft, Google, and OpenAI to explore opportunities for custom chip development. Beyond data center chips, Nvidia is also eyeing the telecom, automotive, and video game markets.
This expansion into custom chip design has the potential to challenge market leaders Broadcom and Marvell, particularly in the data center custom chip space. The broader custom chip market was estimated to be worth approximately $30 billion in 2023, constituting about 5% of annual global chip sales.
In addition to AI, Nvidia is reportedly in talks with Ericsson for a wireless chip that incorporates the chip designer’s graphics processing unit (GPU) technology, targeting the telecom infrastructure sector. The company also plans to extend its reach into the automotive and video game markets, with expectations for continued growth in these sectors.
This move signifies Nvidia’s strategic response to evolving market dynamics and increasing demand for customized chip solutions across various industries beyond artificial intelligence.
