US chipmaker Nvidia is looking to tap into the $30 billion market for custom artificial intelligence (AI) chips, Reuters mentions.
To do this, the company is creating a new division to design custom chips for coud computing players, including advanced AI processors.
Competing with Broadcom and Marvell Technology
Custom AI chips are currently offered by Broadcom, Marvell Technology and others. Nvidia has already discussed this project with Amazon, Meta, Microsoft, Alphabet and OpenAI, according to the news agency. Besides data center chips, Nvidia is also said to offer custom AI chips for telecommunications, automotive and video games.
Nvidia currently has about 80% of the market for high-end AI chips. Its market capitalization more than tripled last year and is up about 40% year to date to $1.73 trillion.
Many technology companies, including OpenAI, Microsoft and Alphabet, are racing to acquire AI chips in order to compete in the generative AI sector. Sam Altman, CEO of OpenAI, has just completed a world tour dedicated to the subject.
Nvidia’s H100 and A100 chips are used as general-purpose AI processors, but tech companies are starting to develop their own in-house chips for specific needs. These in-house chips are expected to help reduce power consumption and potentially reduce costs and design times.
Global custom AI chip market size in 2023, around $30 billion
According to investment bank Needham, the global market for custom AI chips will be worth about $30 billion in 2023, or about 5% of annual global chip sales. The market for custom AI chips in data centers is expected to reach $10 billion this year and double by 2025, according to Alan Walkle of research firm 650 Group.
Currently, this sector is dominated by Broadcom and Marvell. Nvidia’s expansion in this area could significantly hit the market shares of Broadcom and Marvell, according to Reuters.
“With Broadcom’s custom chip business being $10 billion (in sales per year) and Marvell’s business being $2 billion (in sales per year), this is a real threat,” he said. Dylan Patel, from the research company Semiannualis.
Growth of custom chips for telecommunications, automotive and gaming
Nvidia is also reportedly in talks with telecom equipment maker Ericsson to develop a wireless chip with Nvidia’s graphics processing unit (GPU) technology, and plans to target the automotive and video gaming markets.
The market for custom chips for telecommunications is expected to remain around $4 billion to $5 billion per year. The market for custom automotive chips is expected to grow 20% annually, from $6 billion to $8 billion. Additionally, the market for custom chips for video games is expected to grow from $7 billion to $8 billion with next-generation consoles from Microsoft and Sony.
Nintendo’s Switch is already equipped with an Nvidia chip, the Tegra X1, and the new version released this year would feature a custom Nvidia chip.
Source: “ZDNet Korea”