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Google Considers Designing Own AI Chips, Potentially Saving Billions

Google is considering designing its own AI chips in-house, potentially saving the company billions of dollars in costs annually. This move comes as Google ramps up its chip investments in a bid to play catch-up with Microsoft in the booming market for generative AI applications.

According to a report by The Information, Google executives have discussed dropping Broadcom, the company's current supplier of AI chips, as early as 2027. Google has been ramping up chip investments this year as it plays catch-up with Microsoft for domination of the booming market for generative AI applications such as ChatGPT.

The report said Google's deliberations follow a standoff between the company and Broadcom over the price of the TPU chips. Google has also been working to replace Broadcom with Marvell Technology as the supplier for chips that connect servers to ethernet switches in its data centers.

Broadcom is seen as the second-biggest winner from the generative AI boom after Nvidia. CEO Hock Tan had predicted in June the technology could account for more than a quarter of the company's semiconductor revenue next year.

In May, J.P. Morgan analysts estimated Broadcom could get $3 billion in revenue from Google this year after a "recent order acceleration" by the company for its TPU processors. Google co-designs its AI chips with Broadcom and tech giant has already lined up the semiconductor firm for its sixth generation processor, the analysts said. They added Broadcom also works with Meta Platforms on the social media giant's custom chips.

Big technology companies from Microsoft to have in recent years rushed to develop custom chips that help them save on costs and are suited to their specific workloads. That push has accelerated this year after prices surged for Nvidia's H100, the chip that powers most generative AI apps, to nearly double its original cost of $20,000.

Why is Google Considering Designing Its Own AI Chips?

There are several reasons why Google might be considering designing its own AI chips in-house. First, it could save the company money. Google is currently paying Broadcom billions of dollars for its AI chips. By designing its own chips, Google could cut out the middleman and save a significant amount of money.

Second, designing its own chips would give Google more control over the design and manufacturing process. This would allow Google to customize the chips to its specific needs and to ensure that they are of the highest quality.

Third, designing its own chips would give Google a competitive advantage in the AI market. Google is currently facing stiff competition from Microsoft and other tech giants that are also developing their own AI chips. By designing its own chips, Google could stay ahead of the competition and maintain its leadership in the AI market.

What are the Challenges of Designing AI Chips?

Designing AI chips is a complex and expensive process. It requires a deep understanding of chip design and AI technology. Google will need to invest heavily in research and development in order to design its own AI chips.

Another challenge is that the AI chip market is evolving rapidly. New technologies are emerging all the time. Google will need to keep up with the latest trends and technologies in order to design AI chips that are competitive in the market.

What are the Implications of Google Designing Its Own AI Chips?

If Google decides to design its own AI chips, it would be a significant development in the AI market. It would send a signal that Google is serious about AI and that it is committed to investing in the technology.

Google designing its own AI chips would also have a ripple effect on the rest of the AI market. Other tech giants would likely follow suit and start designing their own AI chips. This would lead to more competition and innovation in the AI market.

Overall, Google designing its own AI chips would be a positive development for the AI market. It would lead to lower costs, better chips, and more innovation.

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