Google is building its own AI chips—and it’s a warning shot at Nvidia and Intel

Google is building its own AI chips—and it’s a warning shot at Nvidia and Intel

Google announced a proprietary chip Tuesday that could help the company cut back its reliance on heavyweight chipmakers and gain a foothold in the increasingly competitive AI race.

The new chip, dubbed Axion, will help handle the massive amount of data used by AI applications, Google said in a Tuesday statement. It’s designed to be grouped into clusters of thousands of chips to improve performance, the Wall Street Journal reported.

The new chips—which are central processing units, or CPUs—are reportedly 30% better than already available “general-purpose” chips that use similar circuitry made by the U.K.-based semiconductor and software company Arm, the company said in a statement. Although Google had previously made other chips for its different business segments, this is its first meant to support AI in data centers.

Customers of the Alphabet subsidiary will be able to access Axion through Google’s cloud business later this year, but will not be able to buy them directly, according to the Journal. The company’s vice president overseeing proprietary chips, Amin Vahdat, told the outlet that it wants to take a different approach.

“Becoming a great hardware company is very different from becoming a great cloud company or a great organizer of the world’s information,” Vahdat said.

By not selling directly to customers, Google is avoiding direct competition with its longtime partners—and dominant chipmakers—Intel and Nvidia. Instead, Vahdat said, the company sees its entry into the chip market as a positive for everyone in the industry.

“I see this as a basis for growing the size of the pie,” Vahdat said.

As the hypercompetitive race to enable AI heats up, Google’s rivals likely don’t share that vision. On Tuesday, Santa Clara, Calif.–based semiconductor company Intel released the artificial-intelligence-focused chip Gaudi 3. Intel says the new chips will be available by the third quarter, and can be used to train large language models (LLMs) like ChatGPT. The company claims the Gaudi 3 chips have an edge over Nvidia’s competing chip, the H100.

Nvidia, meanwhile, announced the new generation of its popular H100 chip in November and plans to release it later this year. Still, shares of Nvidia closed down 2% on Tuesday following the news. The company has seen its stock skyrocket about 75% since the start of the year on outsize demand for its powerful H100 chips, but is facing increasing competition.

Shares of Google parent company Alphabet jumped as much as 2.4% on the day following news of the new chip before paring back gains. The stock closed up 1.28% at about $158.

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