Nvidia currently controls about 80% of the high-end AI chip market, a position that has increased the company’s stock market value to $1.82 trillion. Tech giants like OpenAI, Microsoft, Alphabet, and Meta are racing to secure chips to compete in the rapidly emerging field of generative AI.
Aiming to potentially reduce energy consumption and reduce design cost and time, some of Nvidia’s major customers are now starting to develop their own internal chips tailored to their specific needs.
However, according to ReutersNvidia intends to counter potential threats to its business by entering the lucrative custom chip market.
In 2022, Nvidia announced that it would allow third-party customers to integrate some of its proprietary networking technology with its chips. Sources say NVIDIA officials are currently meeting with representatives of its largest technology customers to discuss manufacturing custom chips for them.
Dina McKinney, a former AMD and Marvel executive, leads Nvidia’s custom division, and her team’s goal is to expand beyond the data center to help the company’s cloud, 5G wireless, video gaming, and automotive customers. It’s about making technology available.
The data center custom chip market is expected to grow to as much as $10 billion this year and double that amount by 2025, according to estimates by research firm 650 Group. The broader custom chip market will be worth about $30 billion in 2023, which translates to about $500 million. % of global annual chip sales.
Broadcom and Marvell currently dominate custom silicon designs for data centers. If Nvidia moves into this space, sales could come under pressure. Following the Reuters report, Nvidia stock rose 2.75%, while Marvell stock fell 2.78%.
