Summary: Microsoft is providing financial support to bolster AMD's efforts to develop AI chips and is collaborating on a self-developed AI chip codenamed Athena, part of Microsoft's multi-pronged approach to AI chip development. However, some analysts say that even with a timeline in place, Microsoft and AMD will struggle to catch up quickly to NVIDIA's significant lead.
As the AI craze continues, Microsoft is preparing to collaborate with AMD on self-developed AI chips.
On Thursday, May 4, sources familiar with the matter said that Microsoft is providing financial support to strengthen AMD's efforts to develop AI chips, and is working with them to develop a self-developed AI chip codenamed Athena, part of Microsoft's multi-pronged approach to AI chip development.
Following the news, AMD shares surged more than 12% intraday, briefly surpassing the $90 mark. NVIDIA's stock, on the other hand, continued its morning decline, falling more than 1%.
With the explosive growth of generative AI chatbots like ChatGPT and other services based on this technology, the market has seen significant demand for AI chips. Microsoft is both a top cloud computing service provider and a driving force behind AI adoption.
Some analysts believe that this move reflects Microsoft's deepening involvement in the chip industry. Over the past few years, the company has been building a chip division under the leadership of former Intel executive Rani Borkar, which currently has nearly 1,000 employees. According to one insider, several hundred of those employees are working on the Athena project, and Microsoft has invested about $2 billion in the project so far.
However, this doesn't signal a split between Microsoft and NVIDIA. Microsoft intends to maintain close cooperation with NVIDIA, whose chips are the mainstay for training and running AI systems. Microsoft is also trying to acquire more NVIDIA chips, highlighting the urgent shortage of AI chips faced by Microsoft and other companies.
In mid-April, media reports cited two insiders as saying that Microsoft began developing the AI chip codenamed Athena back in 2019. One of the insiders said that some employees from Microsoft and OpenAI have already begun testing and using these chips. Microsoft hopes that the performance of the chip will surpass that of chips currently purchased from other suppliers, saving time and costs in its expensive AI operations.
Microsoft's chips are specifically designed for training software like large language models. At present, nearly all AI chips used in the market come from NVIDIA, whose AI chips are often in short supply and expensive due to capacity constraints. This has forced companies like Microsoft to produce their own AI chips. Microsoft has stated that it needs thousands of NVIDIA's AI chips to support ChatGPT.
Tracy Woo, a senior cloud analyst at Forrester Research, said that the AI boom has put increasing pressure on cloud providers, forcing them to develop their own chips: Cloud computing companies can certainly buy chips from NVIDIA, but for giants like Google and Amazon, they have enough funds to develop their own chips.
AMD is already a chip supplier for Microsoft and other cloud service providers like Google and Oracle. The AI chip sector is also a key priority for AMD.
AMD CEO Lisa Su said on a Tuesday conference call: We are very excited about the opportunities in the AI space - this is our top strategic priority, and we are in the early stages of the AI computing era, with adoption and growth rates faster than any other technology in recent history.
Su also said that AMD has the opportunity to manufacture some custom chips for its major customers to use in their AI data centers.
Insiders said that even with a timeline in place, the first version of the chip to be released in the future will only be a starting point. It takes years to develop a good chip, and NVIDIA already has a significant lead. NVIDIA is the preferred chip supplier for many generative AI providers, including Amazon's AWS and Google Cloud. Elon Musk has also purchased 10,000 NVIDIA AI chips for his fledgling AI business.
Microsoft is not the only company attempting to develop its own AI chips. Microsoft's cloud computing rival Amazon acquired Annapurna Labs in 2016 and developed two different types of AI chips; Alphabet, Google's parent company, also has its own training chips.
