Amazon hopes to challenge Nvidia more directly by selling its AI chips
Amazon — aWS is in talks to sell its chips to other data centers. CEO Andy Jassy has said this represents a $50 billion opportunity for the company.
DeSantis declined to specify which companies could be the buyers of these chips. Such talk about selling chips is in the early stages, the company tells TechCrunch. They stem from Amazon CEO Andy Jassy’s annual shareholder letter in early April, in which he said the company’s homegrown AI chips were so coveted that he was thinking about selling them: If our chips business was a standalone business, and sold chips produced this year to AWS and other third parties (as other leading chips companies do), our annual run rate would be ~$50 billion. There’s so much demand for our chips that it’s quite possible we’ll sell racks of them to third parties in the future. How much of a challenge could Amazon be to Nvidia? A $50 billion competitor wouldn’t exactly tank Nvidia — which is currently on a $326 billion revenue run rate — if it keeps delivering quarters like the last one. But it’s akin to Intel’s annual revenue. AWS has so far resisted selling its AI chips for a lot of reasons. The biggest is that the money AWS actually makes on its chips is a waterfall effect. Sure, it charges customers directly for the AI tokens those chips process on its cloud, but it also gets to charge for a host of other services companies need for their AI apps, including storage, security, networking, and monitoring services. Equally important, Amazon has touted the capacity of its chips has been selling out faster than it can produce them. In that same shareholder letter in April, Jassy said the current Trainium chip capacity had sold out almost instantly. So, too, he said, had the capacity for the next one, Trainium4, which won’t even be available for more than a year. This was before AWS formally added OpenAI to the models it was serving up. So selling its chips to others means it would likely have to leave current customers on waiting lists, unless it could somehow manufacture a surplus of chips through its manufacturing partners such as TSMC. But it would have to miraculously elbow Nvidia out of the way to do that with TSMC, which has recently supplanted Apple to become the foundry’s largest customer.
