Having been relegated to a distant second by rival Nvidia, AMD announced the acquisition of a company called Nod.ai this past week in a move it hopes would help Team Red catch up to its competition in the artificial intelligence space.
The dynamics in the AI market are currently lopsided, with Nvidia controlling 80% of the global market for chips best suited to run AI applications; and while Team Green's hardware may be great, it is not without its fair share of critics, who cite the overly high price tag of Nvidia's offerings as a potential barrier to expansion.
As an example, OpenAI, which powers its generative AI tool using Nvidia's GPUs, burns billions of dollars to run ChatGPT, and if the number of queries to the chatbot grow even to a tenth of the scale of Google search, the Microsoft-backed company would require roughly $48.1 billion worth of GPUs initially and about $16 billion worth of chips a year to keep operational.
That's a tall order, and AMD knows it. That's why, the Santa Clara, Calif.-based semiconductor company is looking to compete with Nvidia by developing AI hardware and software that is cheaper and runs as well as the competition. This strategy would be quite similar to the one Team Red's been using under CEO Lisa Su to capture the market in the consumer PC space, blindsiding the likes of Intel and Nvidia by offering powerful graphic cards and processors at prices that were more easy to swallow for consumers.
AMD's of Nod.ai gives the company's hardware a foot in the door given that the latter has developed a technology that makes it possible for companies to deploy AI models that are tuned for AMD's chips.
While the company may be some ways off from achieving the same success as Nvidia, it does seem to be gearing up to beat the trillion dollar company on pricing once it has good enough hardware and software to do so. AMD's entry in the market would mean it could meet demand and help organizations diversify their supply beyond Nvidia which possibly can't produce enough of its products to supply to everyone.
AMD isn't the only tech company looking to further its hold in the AI industry through acquisitions, though.
A from Reuters details attempts by Microsoft darling OpenAI to invest in a chip company and design the kind of processor it needs to power its AI efforts and products. On the surface, doing so makes sense for CEO Sam Altman; why pay Nvidia billions of dollars when you could just buy a company to do it for you? But acquiring a semiconductor company isn't as easy as it sounds, what, with the regulations and the cost needed to make such a thing a reality.
So, more acquisitions in the sector? We'll see.
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