Artificial intelligence (AI) has been a hot topic at tech events all year as the public becomes more aware of its power and businesses learn how to leverage it. This has driven demand for AI accelerator chips like those made by Nvidia and for in-house chips developed by cloud service providers, hardware makers, and other tech giants. This has been good news for memory chipmakers, including SK Hynix, Samsung Electronics, and Micron, who have seen their stock prices climb on the back of the sector’s resurgence.
But now, the situation may be changing. According to a new report by The Information, Alphabet-owned Google has discussed dropping Broadcom as its supplier of AI chips. The company currently depends on the chipmaker to supply tensor processing units, a key component of its AI infrastructure. The potential shift has sent Broadcom’s shares down 5% in premarket trading on Thursday.
The report said that if that does happen, Google will design the chips — known as tensor processing units or TPUs — in-house. It added that executives set a goal earlier this year to ditch Broadcom following a standoff between the companies over the price Broadcom was charging for the chips.
TPUs are essential because they help speed up the work of neural networks, which learn how to perform specific tasks by analyzing large amounts of data and identifying patterns. The faster the neural networks can operate, the more accurate and valuable the results will be.
This is especially true for generative AI, which generates text or other output forms using data. Generative AI applications are expected to become increasingly popular over the coming years as businesses and consumers look for more personalized experiences.
But, generating AI requires powerful processors, which require lots of high-bandwidth memory. The current market for memory chips has been sluggish, but the latest developments could spark an uptick in demand.
A resurgence in demand for memory chips might also relieve the slumping chip industry. The COVID-19 pandemic and a global supply glut have hurt the memory chip business. However, new demand for AI accelerator chips may boost sales.
It’s also worth noting that the report comes just a day after rival Microsoft hosted an event at its headquarters to showcase new AI-powered features of its search engine and Edge browser. The product updates were built on technology from generative AI developer OpenAI, which Microsoft invested billions in. This has prompted concerns that Microsoft is catching up with Google in AI. However, it’s too early to tell whether the moves will impact Microsoft’s bottom line or its long-term strategy for dominating the field of generative AI.
