Meta Begins Custom Chip Production to Reduce Dependency on Nvidia
Meta Platforms (NASDAQ: META) plans to start production of a custom AI chip in September 2023, aiming to enhance its AI compute power to 14 gigawatts by 2027. This initiative, developed in collaboration with Broadcom and manufactured by Taiwan Semiconductor Manufacturing, seeks to lessen Meta’s reliance on Nvidia (NASDAQ: NVDA), which previously supplied a significant portion of the graphics processing units (GPUs) used by the social media giant.
Meta’s testing of the new chip was completed in just six weeks, revealing no significant issues. The company has indicated its intention to design four generations of in-house processors to support its AI infrastructure while reducing the costs associated with Nvidia’s GPUs, which accounted for an estimated 80% to 90% of the AI chip market until last year.
Despite this shift, Nvidia remains a key player in the AI chip market, holding a 74% share of AI inference chips as of Q1 2023. Analysts expect Nvidia’s earnings growth to continue, even as competitors increase their custom chip offerings.
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