Problems with designing its in-house chips have forced Microsoft Corporation to delay its plans and launch an intermediary chip due to competitive fears, suggests a report from The Information. Like Amazon and Google, both of which rely on custom in-house AI processors to reduce reliance on NVIDIA's expensive chips, Microsoft also focuses on in-house chips, but its software-centric business has meant that the firm has few options available. As a result, it aims to catch up with peers and develop alternatives to NVIDIA, but the report suggests that it has had to shake up its plans to accommodate design delays.
Microsoft Now Expects To Launch In-House AI Chip In 2027 As It Fears Competition From NVIDIA, Says Report
Today's report builds on an earlier report, also from The Information, which had claimed that Microsoft's Braga AI chip was to delay its mass production from 2025 to 2026. Braga was expected to be a successor to the Microsoft Maia, which was announced in April 2024 and manufactured using TSMC's 5-nanometer manufacturing process.
However, according to today's report, Braga's delay led to concerns about the chip's successors, namely Braga-R and Clea, also being delayed. These worries could mean that the chips are not competitive enough with NVIDIA's latest products, and as a result, Microsoft has now purportedly opted for a middle way through which it will launch an AI chip in 2027 that 'lies between' Braga and Braga-R.
The Information quotes two sources to share that this new AI chip will likely be called the Maia 280 and link together two Braga chips for greater performance. Like Amazon, Microsoft is also seeking to compete with NVIDIA in performance-per-watt or power efficiency. The firm's executives believe that the new chips can offer as much as 30% improved performance over NVIDIA's 2027 chips.
NVIDIA's latest AI chips right now are the Blackwell GPUs, which have started shipping in 2025, and the firm's next-generation AI chips are called Rubin. Microsoft's executives aim to eventually produce hundreds of thousands of in-house AI chips annually. Big tech companies are seeking to diversify away from NVIDIA, with reports suggesting that firms such as Google have started offering their in-house AI chips to computing infrastructure providers for third-party use.
The surging interest in custom chips has also led chip designers, such as Broadcom and Marvel, to experience more orders. Marvel's shares closed 2024 88% higher but are down by 33% year-to-date. The stock has suffered as the firm has failed to deliver on lofty investor and analyst AI expectations.
While Amazon and Google do rely on in-house AI chips, NVIDIA is nevertheless the indisputable market leader. CEO Jensen Huang believes that custom AI chip projects are struggling due to his company's competitive advantage. While NVIDIA's shares struggled between May and June, they have surged recently to catapult it once again to the top spot in market valuation. Driving the gains are analyst estimates of booming future AI demand and an increased role of GPUs in the global computing infrastructure market.
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