Inside Amazon.com‘s chip lab in Austin, Texas, a team of engineers was busy testing a new server design on a Friday afternoon. This server, loaded with Amazon’s own artificial intelligence chips, represents a strategic move to compete with market leader Nvidia. Rami Sinno, an Amazon executive, highlighted the company’s effort during a visit to the lab.
Amazon is creating its own processors to decrease its dependence on Nvidia chips, which are known for being expensive and crucial to powering the AI cloud services of Amazon Web Services (AWS), a major growth area for the company. By using in-house chips, Amazon aims to provide customers with more affordable options for complex calculations and data processing.
Similar efforts are underway at competitors Microsoft and Alphabet. Sinno, who leads engineering for Amazon’s Annapurna Labs—a key part of AWS—mentioned that customers increasingly seek cheaper alternatives to Nvidia’s offerings. Amazon acquired Annapurna Labs in 2015, and since then, its flagship Graviton chip, which handles non-AI tasks, has reached its fourth generation. The newer AI chips, Trainium and Inferentia, are also part of this initiative.
David Brown, AWS Vice President of Compute and Networking, noted that Amazon’s chips could potentially offer up to 50% cost savings compared to using Nvidia’s products. This shift towards more economical solutions is essential for AWS, which saw a 17% increase in sales to $25 billion in the first quarter of the year. AWS now commands roughly a third of the cloud computing market, with Microsoft’s Azure trailing at around 25%.
During the recent Prime Day event, Amazon deployed a number of its custom chips, including a quarter million Graviton chips and 80,000 AI chips, to handle increased platform activity. This shopping event resulted in record sales of $14.2 billion, according to Adobe Analytics.
| Provider | Market Share | Q1 Sales Growth |
|---|---|---|
| AWS | 33% | 17% |
| Microsoft Azure | 25% | N/A |
| Others | 42% | N/A |
Featured Image courtesy of The Washington Post
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