Amazon Web Services is holding early discussions about selling its Trainium AI chips directly to companies for use in their own data centers. Such sales would take AWS beyond offering the chips through its cloud and place its hardware business in more direct competition with Nvidia.
AWS AI chief Peter DeSantis confirmed the discussions but did not identify the potential buyers. Amazon said the conversations remain exploratory and no final decision has been made.
Amazon Estimates a $50 Billion Chip Business
Amazon CEO Andy Jassy first raised the possibility of external Trainium sales in his 2025 shareholder letter. He estimated that Amazon’s custom-chip operation would have an annual revenue run rate of about $50 billion if it operated independently and sold its current production to AWS and other customers.
Amazon reported in April that its chip business had already exceeded a $20 billion annual revenue run rate and was growing at a triple-digit percentage. The company develops Trainium accelerators for AI training and inference, along with Graviton processors for general cloud workloads.
Jassy said demand could eventually lead Amazon to sell complete racks of chips to outside companies. That would allow customers to install Trainium systems in their own facilities instead of accessing them only through AWS.
Direct Sales Could Reduce AWS Cloud Revenue
AWS currently earns revenue when customers use Trainium through its cloud infrastructure. Those workloads also generate spending on storage, networking, security, monitoring, databases, and other services.
Selling hardware directly could reduce some of that additional cloud revenue. It would also require Amazon to reserve chips for external buyers while demand from its existing AWS customers remains high.
Trainium2 capacity has been fully subscribed, while almost all Trainium3 supply was expected to be committed by mid-2026. Trainium4 is scheduled to arrive in 2027, with OpenAI committing to use about two gigawatts of Trainium capacity through AWS.
Amazon relies on manufacturing partners, including TSMC, to produce its chips. Expanding direct sales would require enough manufacturing capacity to serve external buyers without extending waiting periods for AWS customers.
Nvidia Retains a Much Larger Chip Business
Nvidia reported $81.6 billion in revenue for its latest quarter, equal to an annualized rate of more than $326 billion. Amazon’s estimated $50 billion standalone chip business would therefore remain considerably smaller, although it would be comparable with the annual revenue of an established semiconductor company.
AWS continues to buy Nvidia hardware while developing its own alternatives. The companies announced in March that AWS would add more than one million Nvidia GPUs across its cloud regions beginning in 2026.
Amazon also says Trainium2 instances can offer 30% to 40% better price performance than comparable Nvidia GPU-based AWS instances. Direct sales would test whether that pricing advantage can attract companies operating AI infrastructure outside Amazon’s cloud.
Featured image credits: Tony Webster via Flickr
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