Nvidia, known for its high-demand GPUs, is leveraging this demand to its advantage by expanding into cloud services and new hardware. This move has put Nvidia in direct competition with its own customers, such as Amazon, who are in desperate need of the chips. In response to the demand for GPUs, Nvidia has launched DGX Cloud, a cloud service that rents Nvidia-powered servers from data centers and rents them to customers promising greater computing power. Despite initial hesitation from AWS, the competition ultimately gave in to Nvidia’s terms to avoid straining their relationship with the chip supplier.
Nvidia’s strategy also extends to requiring customers to have increased data center capacity to house the GPUs they purchase, and even providing guidelines on how to design the racks within their data centers to accommodate Nvidia chips specifically. This policy could make it challenging for customers to switch to competitors’ chips in the future without incurring significant costs.
Despite the symbiotic relationship between Nvidia and customers like Amazon, competition is still on the horizon. AWS, in response to Nvidia’s cloud expansion, is developing its own AI chips to compete with Nvidia’s offerings. However, Nvidia’s quest for industry dominance has sparked potential antitrust investigations, with the Justice Department reportedly looking into whether Nvidia achieved its leading semiconductor supplier status through anti-competitive practices.
While Nvidia’s current strategies have led it to become the world’s most valuable company, the potential for antitrust investigations could pose a threat to its continued success. Nvidia has declined to comment on the reported investigations.
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https://www.businessinsider.com/nvidia-advantage-amazon-desperation-for-gpu-chips-2024-6?amp
