NVIDIA’s Bold Move into the $30 Billion Custom Chip Market

Nvidia, known for its AI chips, is creating a new unit to design special chips for cloud computing and AI.
The goal is to grab a slice of the expanding custom AI chip market and safeguard against competitors.
The company holds an 80% share in the high-end AI chip market, boosting its value to $1.73 trillion.

Major customers, including OpenAI, Microsoft, Alphabet, and Meta, rush to acquire Nvidia chips for generative AI.
Nvidia’s H100 and A100 chips serve as all-purpose AI processors, but companies are developing their chips for specific needs.
Developing internal chips helps reduce energy consumption and design costs.

Nvidia aims to assist companies in creating custom AI chips, countering competition from firms like Broadcom and Marvell Technology.
Custom chips cater to specific needs, optimizing power usage and reducing costs.
Nvidia met with tech giants like Amazon, Meta, Microsoft, Google, and OpenAI for potential chip collaborations.
The company’s wider ambitions, including data centres, telecom, automotive, and video games, have been kept low-key since 2022.

The data centre custom chip market is predicted to reach $10 billion in 2024 and double by 2025.
The broader custom chip market hit $30 billion in 2023, constituting around 5% of global chip sales.
Broadcom and Marvell dominate custom silicon designs for data centres.

Nvidia’s move into custom chip design could challenge Broadcom and Marvell’s dominance.
Broadcom’s custom silicon business at $10 billion and Marvell’s at around $2 billion face potential competition.

Nvidia is in discussions with Ericsson for a wireless chip that integrates Nvidia’s GPU technology.
The telecom custom chip market is estimated to remain around $4 billion to $5 billion yearly.
Nvidia plans to target the automotive and video game markets for further expansion.
The custom auto market is expected to grow steadily from $6 billion to $8 billion annually.

The $7 billion to $8 billion video game custom chip market could see growth with next-gen consoles from Xbox and Sony.
Nintendo’s Switch handheld console already uses an Nvidia chip, and a new version expected this year may feature a custom design.

Nvidia’s venture into the custom chip market marks a significant move to stay ahead in the ever-evolving tech industry.
With potential collaborations across various sectors, the company aims to diversify its offerings and maintain its market dominance.
The impact on competitors and the overall chip market remains to be seen, but Nvidia’s ambitious strategy has caught the attention of major players in the tech world.

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