Also want to shake off NVIDIA? Report: Microsoft in talks with Broadcom for custom chips
According to reports, Microsoft is in talks with Broadcom for a custom chip design collaboration, potentially shifting its business from the current supplier Marvell to reduce dependence on NVIDIA. As the development of AI products accelerates, the demand for custom chips has surged, with tech giants seeking to diversify their supply chains to mitigate risks. Custom chips can be optimized for specific AI workloads, offering performance and cost advantages
Microsoft is in discussions with Broadcom to design future custom chips, a move that may indicate Microsoft will shift related business from its current supplier Marvell to Broadcom. This action highlights the tech giant's strategic layout to accelerate its departure from reliance on NVIDIA amid the artificial intelligence boom.
On December 5th, according to technology media The Information, a source involved in the discussions revealed that Microsoft and Broadcom are negotiating custom chip design. If the collaboration is reached, Broadcom will replace Marvell as Microsoft's new partner in the custom chip field.
The report states that this potential deal comes as major tech giants compete to acquire more semiconductors to expand their AI product lines.
Broadcom is seen as the most capable competitor to challenge NVIDIA's dominance in the semiconductor market. The company's layout in the custom chip field is closely linked to CEO Hock Tan's preference for large deals and decisive management style.
This cooperation discussion reflects the intensifying competition in the custom chip market, with chip manufacturers actively vying for orders from tech giants.
Surge in Demand for Custom Chips
The report indicates that as companies like Microsoft accelerate AI product development, the demand for custom chips has surged. Currently, NVIDIA dominates the semiconductor market, but tech companies are seeking to diversify their chip supply chains to reduce dependence on a single supplier.
Custom chips can be optimized for specific AI workloads, providing tech companies with performance and cost advantages. This has prompted giants like Microsoft and Meta to increase their investments in the custom chip field. According to three insiders involved in the development, Meta plans to launch this chip in 2027.
The report also notes that this collaboration reflects the intensifying competition in the custom chip market. According to two insiders involved in the negotiations, Marvell has recently adopted a strategy of waiving some upfront engineering design fees to secure more business from Meta.
With its technological strength and scale advantages, Broadcom is vying for a larger market share in this competition. The company is viewed by the market as a major competitor capable of rivaling NVIDIA
