Key facts
- Amazon Web Services is considering selling its custom AI chips, Trainium, to external companies.
- AWS AI chief Peter DeSantis confirmed that talks are underway to sell these chips.
- The potential move could create a $50 billion annual market for Amazon's chip business.
- This initiative represents a significant challenge to Nvidia's current dominance in the AI chip market.
- Amazon's CEO Andy Jassy previously hinted at this possibility in his annual shareholder letter.
Amazon Web Services (AWS) is exploring the sale of its custom-designed AI chips, specifically the Trainium model, to external companies, a move that could directly challenge Nvidia's long-standing dominance in the artificial intelligence hardware market. AWS AI chief Peter DeSantis confirmed that the company is in talks with potential buyers, although these discussions are in their early stages.
This potential expansion into selling chips directly to third parties stems from Amazon CEO Andy Jassy's recent shareholder letter, where he indicated that the demand for AWS's homegrown AI chips was so high that selling them externally was a possibility. Jassy suggested that if the chip business were standalone, it could achieve an annual run rate of approximately $50 billion. Such a figure would position Amazon as a significant competitor to Nvidia, which currently has a revenue run rate of $326 billion.
Historically, AWS has been hesitant to sell its chips externally, primarily because the profitability of its chip operations is tied to a broader ecosystem of services offered on its cloud platform, including storage, security, and networking. Furthermore, Amazon has faced internal demand that outstrips its production capacity, with current Trainium chip capacity selling out rapidly. Selling chips to external customers would likely necessitate a significant increase in manufacturing output, potentially through partners like TSMC, which is already a major client for Amazon.
Nvidia's CEO Jensen Huang has recently spoken about expanding Nvidia's market into selling CPUs for AI, in addition to its dominant GPUs, entering territory previously held by Intel and AMD. Amazon's potential entry into the chip sales market, with ambitions for a $50 billion revenue stream, directly targets Nvidia's core business.