Can Google’s New AI Chip Axion Revolutionize Data Centers? A Game-Changing Move Unveiled

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In a strategic move to reduce dependency on major chipmakers, Google unveiled its proprietary chip, Axion, on Tuesday, signaling its entry into the fiercely competitive field of artificial intelligence (AI) hardware.

The Axion chip is designed to efficiently manage the vast volumes of data required for AI applications, Google announced in a statement. It is intended to be deployed in clusters comprising thousands of chips to enhance performance significantly, as reported by the Wall Street Journal.

According to Google, these new central processing units (CPUs) are approximately 30% more efficient compared to existing “general-purpose” chips utilizing similar circuitry from Arm, a UK-based semiconductor company. While Google has previously developed chips for various business sectors, Axion marks its debut dedicated to supporting AI in data centers.

Although customers of Google’s parent company, Alphabet, will be able to access Axion through the company’s cloud services later this year, direct sales of the chip will not be offered. Amin Vahdat, Google’s vice president overseeing proprietary chips, emphasized that Google aims to pursue a unique approach.

Vahdat explained that Google’s decision not to directly sell Axion to customers helps avoid direct competition with longstanding partners and dominant chipmakers like Intel and Nvidia. Instead, Google views its foray into chip development as beneficial for the entire industry.

“We see this as a way to expand the overall market,” Vahdat remarked.

In response to the hypercompetitive landscape of AI advancement, Intel, headquartered in Santa Clara, California, recently launched its AI-focused chip, Gaudi 3. The chip is anticipated to be available by the third quarter of the year and is optimized for training large language models such as ChatGPT. Intel claims that the Gaudi 3 chip has a performance advantage over Nvidia’s competing H100 chip.

Meanwhile, Nvidia introduced the next generation of its widely acclaimed H100 chip last November, with plans for its release later this year. Despite Nvidia’s ongoing success and a 75% surge in its stock value since the beginning of the year, the company experienced a 2% decline in its stock price on Tuesday following Google’s announcement.

Conversely, shares of Google’s parent company, Alphabet, saw a notable uptick of up to 2.4% upon news of the Axion chip, settling with a 1.28% increase at approximately $158 by market close.

Google’s strategic shift towards developing its own AI chip signifies a pivotal moment in the evolution of AI hardware. By introducing Axion, Google aims to advance the capabilities of its cloud services and strengthen its foothold in the rapidly evolving AI landscape, posing a formidable challenge to industry giants like Intel and Nvidia.

This story was originally featured on Fortune