Intel and Nvidia Chip Giants from Amazon to Google to Apple will be a major threat

This month Amazon unveiled a new chip that, it says, promises to accelerate how algorithms that use artificial intelligence learn from data. The company has already designed other processors for its cloud computing arm, called Amazon Web Services, incorporating computer brains called central processing units.

The pandemic has increased the acceleration of cloud computing as companies have generally embraced this type of digital device using these remote servers. Amazon, Microsoft, Google and others have seen strong growth in the cloud in the remote work time.

Business buyers are also showing a greater desire to analyze the data they collect on their products and customers, prompting a demand for artificial intelligence tools to make sense of the information. that’s all.

Google was an early mover among the tech giants, releasing an AI processor in 2016, and has updated their hardware several times since then. Microsoft’s software giant, the No. 2 cloud behind Amazon, has also invested in chip design, including a programmed chip to handle AI and another security-enhancing one. He is now also working on a central processor, according to someone familiar with his plans. Bloomberg News previously reported on Microsoft ‘s CPU effort.

Driving the trends of the technical giants are changes in the way the semiconductor world operates and a growing awareness that Moore’s Law – the department’s fundamental idea of ​​sustainable development in chip performance – is loss of relevance. As a result, companies are finding new ways to achieve better performance, not always measured in speed, but sometimes lower power consumption or heat generation.

“Moore’s Law has been around for 55 years, and this is the first time it’s been substantially downplayed,” said Partha Ranganathan, vice president and engineering man at Google’s cloud unit. who has been looking for special chips.

The sheer size of the cloud giants poses a challenge to traditional chip producers. In the past, semiconductor manufacturers tended to design their high-performance semiconductors for sexual applications, leaving it to customers to adapt and get the most out of the chips. Now the biggest futures have the financial potential to push for more developed design.

“While in the 1990s Intel was an order of magnitude larger than its customers, now the customer has a better scale over the provider,” said James Wang, analyst at ARK Investment Management, New York money. “As a result, they have more capital and more experience to import parts.”

Nvidia is valued at $ 330 billion, now the largest chip maker in the U.S. by market cap, and Intel at $ 207 billion. Behemoths the clouds, Amazon, Microsoft and Google-parent Alphabet Inc., Inc.

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per capita $ 1 trillion in market valuation.

The special efforts are made to some extent possible by the rise of contract chip manufacturers, who make semiconductors designed by other companies. This arrangement will help technical giants avoid the multi-million-dollar cost of building their own chip factories. Taiwan Semiconductor Manufacturing Co.

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particularly on leapfrogging in chip production technology.

The changes have benefited chip design company Arm Holdings Ltd., which sells rotating designs that anyone can use after paying a license fee. Apple is a huge Army customer, as are all major tech companies that make their own chips.

It is estimated that Amazon, Google and Microsoft each operate millions of servers in vast networks of data centers for their own use and for rent out to millions of cloud computing customers. Even small improvements in performance and a momentary reduction in the cost of power and cooling of chips when they are distributed over these major technological empires are worth it. Facebook Inc.

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has also studied working on his own slits.

David Brown, vice president at AWS, said making its own processors was an obvious choice for Amazon with the performance benefits it could achieve by releasing compatibility with old-fashioned products. software and other standard features of Intel chips that large data center operators do not require.

“We did it [chip] that’s put forward for the cloud, so we were able to remove a lot of unwanted stuff, ”he said. Chip-making efforts on Amazon largely began when they acquired an Israeli company called Annapurna Labs about five years ago.

Conventional chips also find favor in consumer products. This year Apple started using its own processors in Macs after 15 years of discovery from Intel. Google has integrated its AI chip into its Pixel smartphones.

So far, the lost business for traditional chip makers has been mediocre, said Linley Gwennap, a chip industry analyst. Arms-based market share of all central processors is less than 1%, he said. Google’s AI chips are the top company-tech design processors, he said, making up at least 10% of all AI chips. Intel still supplies most of the CPU that goes into data centers.

The owners are also not sitting idly by in the race for cloud domination and AI. Nvidia agreed this year to buy Army in the largest build of the chip industry. And Ian Buck, who heads Nvidia’s data center business, said the company is working closely with the largest customers to make the most of their chips in their hardware configurations.

Intel said about 60% of its server-centric processors sold to large data center operators are made to customer needs, often by eliminating features of the chip that they do not need. .

And Intel has invested in AI processors and other specialized hardware, including the purchase of Israel-based Habana Labs last year for about $ 2 billion. AWS recently agreed to put AI Habana training chips in their data centers, as Amazon develops its competitive chips that it believes will perform better when they appear next year.

Remi El-Ouazzane, chief strategy officer for Intel Data Platforms Group, said AWS ‘Habana chips could challenge Nvidia, the largest player in the AI ​​training market which he said was worth more than $ 25 billion by 2024. “It’s a huge net new opportunity for Intel, and it’s a huge market,” he said.

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Write to Asa Fitch at [email protected]