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NVIDIA has reigned uncontested over the AI chip sphere for far too long. However, now it seems that some much-needed competition is finally putting up a challenge to the GPU manufacturer's full-spectrum dominance over this critical arena.
OMDIA: $GOOGL'S TPU DEMAND GROWS, CHALLENGING $NVDA'S AI CHIP DOMINANCE
Omdia research shows surging demand for Google's TPU chips, with estimates suggesting they could account for $6B–$9B in Broadcom's AI semiconductor revenue this year. At even $6B, TPU shipments are growing…
— Wall St Engine (@wallstengine) December 18, 2024
To wit, Omdia Research has now published its fresh take on the dynamics within the AI chip sphere, noting that Goggle's Tensor Processing Units (TPUs) could account for between $6 billion and $9 billion in AI-related sales for Broadcom this year.
As a refresher, Broadcom is currently developing custom AI chips (ASICs) for three major customers: Google, Meta, and ByteDance. The company is also developing next-gen AIXPUs with two other clients.
For the benefit of those who might not be aware, many cloud providers have begun preferring custom chips or ASICs over NVIDIA's GPUs due to the former's cost advantage over the latter, which enables cost-effective optimization of internal workloads.
As per Morgan Stanley's estimates, the custom AI chip market - driven primarily by cloud providers - will grow from $120 billion in 2024 to $300 billion by 2027, outpacing the growth rate for the GPU market.
Coming back, Omdia believes that even if Broadcom's TPU shipments for 2024 ultimately clock-in at $6 billion, which constitutes the low-end of the research firm's estimated range, they would still be significant enough to dent NVIDIA's AI chip market share!
Looking ahead, Omdia continues to see TPU-powered AI products driving broad-based growth for Google Cloud.
$NVDA +2.75% [Microsoft bought twice as many of Nvidia’s flagship chips as any of its largest rivals in the U.S. and China this year, per FT.
Analysts at Omdia, a technology consultancy, estimate that $MSFT bought 485K of Nvidia’s “Hopper” chips this year. That put Microsoft far…
— NOTRELOAD AI (@thudderwicks) December 18, 2024
Of course, this does not mean that NVIDIA is about to cede its market dominance anytime soon. As an illustration, Omdia notes elsewhere that Microsoft bought a whopping 485,000 units of NVIDIA's Hopper GPUs in 2024, while Meta bought another 224,000 units of these last-gen chips. Meanwhile, NVIDIA continues to prepare the ground for its next-gen Blackwell GPUs to take volume leadership from the older Hopper chips.
Citi on $NVDA (Buy; PT $175): 'Recent custom ASIC chipmakers’ $MRVL and $AVGO strong results are stirring up new investor questions on the old 'GPU vs Custom ASIC' debate.
As highlighted in our recent report, we expect both to coexist with the software reprogrammability to…
— Wall St Engine (@wallstengine) December 18, 2024
Meanwhile, Citi expects the AI chip sphere to grow to a TAM of $380 billion by 2028, where AI GPUs (read NVIDIA) control 75 percent of the market while ASICs account for the residual 25 percent.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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