Nvidia is reportedly setting up a new unit for custom chips

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Written on Feb 9, 2024

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Nvidia is building a new unit that will make custom AI chips for customers.
Custom chips tend to be consume less energy and are more cost-effective.
Nvidia stock is up another 1.0% in premarket trading on Friday morning.

Nvidia Corp (NASDAQ: NVDA) is reportedly setting up a new business unit that will focus on designing custom AI chips for its customers.

Why is Nvidia interested in the custom chips market

Tech companies have recently started exploring alternatives to the H100 and A100 (Nvidia chips) primarily on two concerns: cost and availability.

Switching to custom chips helps on both those fronts.

So, Nvidia Corp is now building a new unit that will make custom artificial intelligence chips for its customers and grab a piece of the market that rivals Marvell Technology and Broadcom Inc have been chasing actively, as per sources that talked to Reuters today on condition of anonymity.

The news arrives only weeks after the semiconductor behemoth partnered with Equinix Inc on AI supercomputers as Invezz reported here.

???? TSMC To Build Second Chip-Making Plant in Japan With Partners

Keep an eye on TSMC as they grow and take market share from Nvidia and AMD. Taiwan is also going to be affected from these new Japanese plants because there will be less exports out of their smaller country,… pic.twitter.com/RcNajRJJbA
— BuyTheCryptoDip (@BuyTheCryptoDip) February 6, 2024

Nvidia has had discussions with its top customers

Sources also confirmed today that Nvidia has already had discussions with its top customers like Google, Meta Platforms, Amazon, Microsoft, and OpenAI on designing custom chips for them.

The Nasdaq-listed firm wants to win business from video game, telecom, and automotive customers as well on top of the data centre giants, they added.

A representative of Nvidia Corp refrained from commenting on the Reuters report on Friday. Note that the California-based company currently dominates the market for sophisticated AI chips with an 80% share.

Wall Street currently has a consensus “buy” rating on Nvidia stock that has already gained close to 45% since the start of this year.