According to media reports, up to nine sources have revealed that Nvidia is establishing a new business unit focused on designing custom chips and advanced artificial intelligence (AI) processors for companies such as cloud computing.
This move is expected to further consolidate Nvidia's leadership position in the field of AI chips. In recent years, companies such as OpenAI, Microsoft, Google, and Meta have been competing to purchase Nvidia's graphics processors (GPUs) in order to compete in the AI field, bringing its market value to $1.7 trillion and ranking among the "Big Seven" of the US stock market.
Due to NVIDIA's H100 and A100 being universal AI accelerators, some technology companies have started developing their own internal chips for specific needs to reduce energy consumption and lower costs. Sources say that Nvidia has seen business opportunities in this area and is planning to play a role in helping these companies develop customized AI chips.
Although Nvidia has not disclosed the price, the H100 is bound to be priced high. Greg Reichow, partner at venture capital firm Eclipse Ventures, said that if a company wants to optimize in terms of power or cost, it should not buy the generic H100 or A100, "because you only need their computing power."
Two sources said that Nvidia executives have met with representatives from Amazon, Meta, Microsoft, Google, and OpenAI to discuss manufacturing custom chips for them. In addition to data center chips, Nvidia is also looking for customers from the telecommunications, automotive, and video gaming industries.
Alan Weckel from 650 Group, a research firm, estimates that the market for custom chips in data centers will grow to $10 billion this year and double on this basis in 2025. Currently, the field of custom chips designed for data centers is led by Broadcom and Marvell.
Sources also revealed that Nvidia is in negotiations with telecommunications infrastructure company Ericsson. Needham analyst Charles Shi stated that the broader custom chip market in 2023 is worth approximately $30 billion, accounting for approximately 5% of global chip annual sales.
Nvidia's entry into this field may erode the sales share of Broadcom and Marvell. In terms of video games, there are reports that Nintendo's new Switch gaming handheld, which is scheduled to be launched this year, may adopt NVIDIA's customized design. Currently, Nintendo's Switch uses Nvidia's Tegra X1 processor.