Broadcom's stock surged in recent weeks, pushing the company's market value over $1 trillion.
Broadcom is crucial for companies seeking alternatives to Nvidia's AI chip dominance.
Custom AI chips are gaining traction, enhancing tech firms' bargaining power, analysts say.
The rise of AI, and the computing power it requires, is bringing all kinds of previously under-the-radar companies into the limelight. This week it's Broadcom.
Broadcom's stock has soared since late last week, catapulting the company into the $1 trillion market cap club. The boost came from a blockbuster earnings report in which custom AI chip revenue grew 220% compared to last year.
In addition to selling lots of parts and components for data centers, Broadcom designs and sells ASICs, or application-specific integrated circuits — an industry acronym meaning custom chips.
Designers of custom AI chips, chief among them Broadcom and Marvell, are headed into a growth phase, according to Morgan Stanley.
Custom chips are picking up speed
The biggest players in AI buy a lot of chips from Nvidia, the $3 trillion giant with an estimated 90% of market share of advanced AI chips.
Heavily relying on one supplier isn't a comfortable position for any company, though, and many large Nvidia customers are also developing their own chips. Most tech companies don't have large teams of silicon and hardware experts in house. Of the companies they might turn to design them a custom chip, Broadcom is the leader.
Though multi-purpose chips like Nvidia's and AMD's graphics processing units are likely to maintain the largest share of the AI chip market in the long-term, custom chips are growing fast.
Morgan Stanley analysts this week forecast the market for ASICs to nearly double to $22 billion next year.
Much of that growth is attributable to Amazon Web Services' Trainium AI chip, according to Morgan Stanley analysts. Then there are Google's in-house AI chips, known as TPUs, which Broadcom helps make.
In terms of actual value of chips in use, Amazon and Google dominate. But OpenAI, Apple, and TikTok parent company ByteDance are all reportedly developing chips with Broadcom, too.
ASICs bring bargaining power
Custom chips can offer more value, in terms of the performance you get for the cost, according to Morgan Stanley's research.
ASICs can also be designed to perfectly match unique internal workloads for tech companies, accord to the bank's analysts. The better these custom chips get, the more bargaining power they may provide when tech companies are negotiating with Nvidia over buying GPUs. But this will take time, the analysts wrote.
In addition to Broadcom, Silicon Valley neighbor Marvell is making gains in the ASICs market, along with Asia-based players Alchip Technologies and Mediatek, they added in a note to investors.
Analysts don't expect custom chips to ever fully replace Nvidia GPUs, but without them, cloud service providers like AWS, Microsoft, and Google would have much less bargaining power against Nvidia.
"Over the long term, if they execute well, cloud service providers may enjoy greater bargaining power in AI semi procurement with their own custom silicon," the Morgan Stanley analysts explained.
Nvidia's big R&D budget
This may not be all bad news for Nvidia. A $22 billion ASICs market is smaller than Nvidia's revenue for just one quarter.
Nvidia's R&D budget is massive, and many analysts are confident in its ability to stay at the bleeding edge of AI computing.
And as Nvidia rolls out new, more advanced GPUs, its older offerings get cheaper and potentially more competitive with ASICs.
"We believe the cadence of ASICs needs to accelerate to stay competitive to GPUs," the Morgan Stanley analysts wrote.
Still, Broadcom and chip manufacturers on the supply chain rung beneath, such as TSMC, are likely to get a boost every time a giant cloud company orders up another custom AI chip.
Intel's co-CEOs discussed splitting the firm's manufacturing and products businesses Thursday.
A separation could address Intel's poor financial performance. It also has political implications.
Intel Foundry is forming a separate operational board in the meantime, executives said.
Intel's new co-CEOs said the company is creating more separation between its manufacturing and products businesses and the possibility of a formal split is still in play.
When asked if separating the two units was a possibility and if the success of the company's crucial, new "18A" process could influence the decision, CFO David Zinsner and CEO of Intel Products Michelle Johnston Holthaus, now interim co-CEOs, said preliminary moves are in progress.
"We really do already run the businesses fairly independently," Holthaus said at a Barclays tech conference Thursday. She added that severing the connection entirely does not make sense in her view, "but, you know, someone will decide that," she said.
"As far as does it ever fully separate? I think that's an open question for another day," Zinsner said.
Already in motion
Though the co-CEOs made it clear a final decision on a potential break-up has not been made, Zinsner outlined a series of moves already in progress that could make a split easier.
"We already run the businesses separately, but we are going down the path of creating a subsidiary for Intel Foundry as part of the overall Intel company," Zinsner said.
In addition, the company is forming a separate operational board for Intel Foundry and separating the operations and inventory management software for the two sides of the business.
Until a permanent CEO is appointed by the board, the co-CEOs will manage most areas of the company together, but Zinsner alone will manage the Foundry business.The foundry aims to build a contract manufacturing business for other chip designers. Due to the sensitive, competitive intellectual property coming from clients into that business, separation is key.
"Obviously, they want firewalls. They want to protect their IPs, their product road maps, and so forth. So I will deal with that part of the foundry to separate that from the Intel Products business." Zinsner said.
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The Biden administration's efforts to boost US semiconductor manufacturing and employment could bear fruit during the Trump administration.
During his term, Biden secured commitments from five of the world's leading chip manufacturers —TSMC, Intel, Samsung, Micron, and SK Hynix — to build factories in the US as part of an effort to shore up production of the critical technology.Semiconductor chips power a wide variety of products, including iPhones, pickup trucks, washing machines, and military equipment.
However, many of these factories are still in various stages of construction, and for some, it will be years before they're producing chips. Much of the hiring for manufacturing roles could come under president-elect Donald Trump or a future administration, experts told Business Insider.
Jeff Koch, an analyst at the semiconductor research and consulting firm SemiAnalysis, told Business Insider that the current building of US chip factories has already created construction jobs. However, Koch said that the anticipated boost in semiconductor manufacturing employment hasn't materialized yet.
Koch and Stephen Ezell, the vice president for global innovation policy at the Information Technology and Innovation Foundation, said manufacturing jobs would likely be realized during the Trump administration.
"The longer it takes to get the funds disbursed and the projects fully underway, then the longer it takes to get to full hiring for construction of the facilities and the operational staffing of them once they're complete," said Ezell, referring to CHIPS Act funding that the five leading chipmakers — in addition to other semiconductor companies — have been allocated from the Biden administration.
The chipmakersare expected to receive some of the $39 billion in manufacturing incentives tied to the CHIPS Act, which President Joe Biden signed into law in 2022. The Biden administration is trying to finalize funding agreements before Trump — who has criticized the CHIPS Act — takes office in January.
The US could see about 42,000 direct jobs at the companies building these factories and 101,500 indirect jobsat chipmakers' suppliers, per a report published in 2021 by the Semiconductor Industry Association — a trade association and lobbying group — thatsaid a $50 billion investment would help create an estimated 10 additional chip factories in the US.
To be sure, it's not uncommon for the benefits of a president's policy initiative to see gainsafter the leader leaves office. This is a reality Biden understands.
"Much of the work we've done is already being felt by the American people, but the vast majority will not be felt, will be felt over the next 10 years," Biden said in November about his administration's policies.
Additionally, the construction of chip factories is particularly complicated, and it often takes years for these projects to be completed.
"This is the world's most complex technology," Jimmy Goodrich, senior advisor for technology analysis to the RAND Corporation, said of semiconductors. "You're talking about producing transistors — billions on a single chip — each of them is 20 to 30,000 times smaller than the human hair."
Business Insider reached out to TSMC, Intel, Samsung, Micron, and SK Hynix to confirm the latest status of their US-based chip factories under construction. The table below shows where the chipmakers have committed to building factories in the US. Intel declined to provide estimated completion dates for its four factories.
When reached for comment, the Trump-Vance transition team didn't respond to a question about Trump's plans to boost US semiconductor manufacturing employment.
Building chip factories takes time
Koch said Taiwan-based TSMC began hiring over two years ago. The company is expected to begin full production levels — BI previously reported it already startedmaking chips for Apple — at its first Phoenix factory early next year after facing some delays.
TSMC is projecting that its second and third chip Phoenix-based factories will begin production in 2028 and by the end of the decade, respectively. The second factory was initially slated for a 2026 opening.
Micron, which is based in Boise, Idaho, has five factories in the works — four in Clay, New York, and one in Boise. The Boise factory is expected to begin production in 2026, the company told BI, but Micron's Clay factories have faced some delays.
SK Hynix, which is based in South Korea, expects to begin mass chip production at its West Lafayette, Indiana factory in the second half of 2028. Samsung is projecting that it will begin chip production at its chip factory in Taylor, Texas in 2026. In October, Reuters reported that Samsung has postponed taking deliveries of chipmaking equipment because it has yet to land any major customers for the project.
The Commerce Department said that TSMC, Intel, Micron, Samsung, SK Hynix, and TSMC are "five of the world's leading and most advanced leading-edge logic and leading-edge memory chip manufacturers." The Commerce Department added that building chip factories is a very intensive and complex construction project — and that it often takes three to five years before factories are fully constructed and operational.
While creating US semiconductor manufacturing jobs would be good news for the people who eventually land these roles, Chris Miller, a nonresident senior fellow at the American Enterprise Institute who focuses on semiconductors, told BI that he thinks the Biden administration's main goal was to boost US chip manufacturing. Doing so could help secure US supply chains and make the country less reliant on advanced chips made in Taiwan.
"The point is to have more chip manufacturing, which will mostly come over the next few years," he said.
Do you work in the US semiconductor industry? Reach out to this reporter at [email protected].
AWS has not committed to offering cloud access to AMD's AI chips in part due to low customer demand.
AWS said it was considering offering AMD's new AI chips last year.
AMD recently increased the sales forecast for its AI chips.
Last year, Amazon Web Service said it was considering offering cloud access to AMD's latest AI chips.
18 months in, the cloud giant still hasn't made any public commitment to AMD's MI300 series.
One reason: low demand.
AWS is not seeing the type of huge customer demand that would lead to selling AMD's AI chips via its cloud service, according to Gadi Hutt, senior director for customer and product engineering at Amazon's chip unit, Annapurna Labs.
"We follow customer demand. If customers have strong indications that those are needed, then there's no reason not to deploy," Hutt told Business Insider at AWS's re:Invent conference this week.
AWS is "not yet" seeing that high demand for AMD's AI chips, he added.
AMD shares dropped roughly 2% after this story first ran.
AMD's line of AI chips has grown since its launch last year. The company recently increased its GPU sales forecast, citing robust demand. However, the chip company still is a long way behind market leader Nvidia.
AWS provides cloud access to other AI chips, such as Nvidia's GPUs. At re:Invent, AWS announced the launch of P6 servers, which come with Nvidia's latest Blackwell GPUs.
AWS and AMD are still close partners, according to Hutt. AWS offers cloud access to AMD's CPU server chips, and AMD's AI chip product line is "always under consideration," he added.
Hutt discussed other topics during the interview, including AWS's relationship with Nvidia, Anthropic, and Intel.
An AMD spokesperson declined to comment.
Do you work at Amazon? Got a tip?
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Editor's note: This story was first published on December 6, 2024, and was updated later that day to reflect developments in AMD's stock price.
AWS's new AI chips aren't meant to go after Nvidia's lunch, said Gadi Hutt, a senior director of customer and product engineering at the company's chip-designing subsidiary, Annapurna Labs. The goal is to give customers a lower-cost option, as the market is big enough for multiple vendors, Hutt told Business Insider in an interview at AWS's re:Invent conference.
"It's not about unseating Nvidia," Hutt said, adding, "It's really about giving customers choices."
AWS has spent tens of billions of dollars on generative AI. This week the company unveiled its most advanced AI chip, called Trainium 2, which can cost roughly 40% less than Nvidia's GPUs, and a new supercomputer cluster using the chips, called Project Rainier. Earlier versions of AWS's AI chips had mixed results.
Hutt insists this isn't a competition but a joint effort to grow the overall size of the market. The customer profiles and AI workloads they target are also different. He added that Nvidia's GPUs would remain dominant for the foreseeable future.
In the interview, Hutt discussed AWS's partnership with Anthropic, which is set to be Project Rainer's first customer. The two companies have worked closely over the past year, and Amazon recently invested an additional $4 billion in the AI startup.
He also shared his thoughts on AWS's partnership with Intel, whose CEO, Pat Gelsinger, just retired. He said AWS would continue to work with the struggling chip giant because customer demand for Intel's server chips remained high.
Last year AWS said it was considering selling AMD's new AI chips. But Huttsaidthose chips still weren't available on AWS because customers hadn't shown strong demand.
This Q&A has been edited for clarity and length.
There have been a lot of headlines saying Amazon is out to get Nvidia with its new AI chips. Can you talk about that?
I usually look at these headlines, and I giggle a bit because, really, it's not about unseating Nvidia. Nvidia is a very important partner for us. It's really about giving customers choices.
We have a lot of work ahead of us to ensure that we continuously give more customers the ability to use these chips. And Nvidia is not going anywhere. They have a good solution and a solid road map. We just announced the P6 instances [AWS servers with Nvidia's latest Blackwell GPUs], so there's a continuous investment in the Nvidia product line as well. It's really to give customers options. Nothing more.
Nvidia is a great supplier of AWS, and our customers love Nvidia. I would not discount Nvidia in any way, shape, or form.
So you want to see Nvidia's use case increase on AWS?
If customers believe that's the way they need to go, then they'll do it. Of course, if it's good for customers, it's good for us.
The market is very big, so there's room for multiple vendors here. We're not forcing anybody to use those chips, but we're working very hard to ensure that our major tenets, which are high performance and lower cost, will materialize to benefit our customers.
Does it mean AWS is OK being in second place?
It's not a competition. There's no machine-learning award ceremony every year.
In the case of a customer like Anthropic, there's very clear scientific evidence that larger compute infrastructure allows you to build larger models with more data. And if you do that, you get higher accuracy and more performance.
Our ability to scale capacity to hundreds of thousands of Trainium 2 chips gives them the opportunity to innovate on something they couldn't have done before. They get a 5x boost in productivity.
Is being No. 1 important?
The market is big enough. No. 2 is a very good position to be in.
I'm not saying I'm No. 2 or No. 1, by the way. But it's really not something I'm even thinking about. We're so early in our journey here in machine learning in general, the industry in general, and also on the chips specifically, we're just heads down serving customers like Anthropic, Apple, and all the others.
We're not even doing competitive analysis with Nvidia. I'm not running benchmarks against Nvidia. I don't need to.
For example, there's MLPerf, an industry performance benchmark. Companies that participate in MLPerf have performance engineers working just to improve MLPerf numbers.
That's completely a distraction for us. We're not participating in that because we don't want to waste time on a benchmark that isn't customer-focused.
On the surface, it seems like helping companies grow on AWS isn't always beneficial for AWS's own products because you're competing with them.
We are the same company that is the best place Netflix is running on, and we also have Prime Video. It's part of our culture.
I will say that there are a lot of customers that are still on GPUs. A lot of customers love GPUs, and they have no intention to move to Trainium anytime soon. And that's fine, because, again, we're giving them the options and they decide what they want to do.
Do you see these AI tools becoming more commoditized in the future?
I really hope so.
When we started this in 2016, the problem was that there was no operating system for machine learning. So we really had to invent all the tools that go around these chips to make them work for our customers as seamlessly as possible.
If machine learning becomes commoditized on the software and hardware sides, it's a good thing for everybody. It means that it's easier to use those solutions. But running machine learning meaningfully is still an art.
What are some of the different types of workloads customers might want to run on GPUs versus Trainium?
GPUs are more of a general-purpose processor of machine learning. All the researchers and data scientists in the world know how to use Nvidia pretty well. If you invent something new, if you do that on GPU, then things will work.
If you invent something new on specialized chips, you'll have to either ensure compiler technology understands what you just built or create your own compute kernel for that workload. We're focused mainly on use cases where our customers tell us, "Hey, this is what we need." Usually the customers we get are the ones that are seeing increased costs as an issue and are trying to look for alternatives.
So the most advanced workloads are usually reserved for Nvidia chips?
Usually. If data-science folks need to continuously run experiments, they'll probably do that on a GPU cluster. When they know what they want to do, that's where they have more options. That's where Trainium really shines, because it gives high performance at a lower cost.
AWS CEO Matt Garman previously said the vast majority of workloads will continue to be on Nvidia.
It makes sense. We give value to customers who have a large spend and are trying to see how they can control the costs a bit better. When Matt says the majority of the workloads, it means medical imaging, speech recognition, weather forecasting, and all sorts of workloads that we're not really focused on right now because we have large customers who ask us to do bigger things. So that statement is 100% correct.
In a nutshell, we want to continue to be the best place for GPUs and, of course, Trainium when customers need it.
What has Anthropic done to help AWS in the AI space?
They have very strong opinions of what they need, and they come back to us and say, "Hey, can we add feature A to your future chip?" It's a dialogue. Some ideas they came up with weren't feasible to even implement in a piece of silicon. We actually implemented some ideas, and for others we came back with a better solution.
Because they're such experts in building foundation models, this really helps us home in on building chips that are really good at what they do.
We just announced Project Rainier together. This is someone who wants to use a lot of those chips as fast as possible. It's not an idea — we're actually building it.
Can you talk about Intel? AWS's Graviton chips are replacing a lot of Intel chips at AWS data centers.
I'll correct you here. Graviton is not replacing x86. It's not like we're yanking out x86 and putting Graviton in place. But again, following customer demand, more than 50% of our recent landings on CPUs were Graviton.
It means that the customer demand for Graviton is growing. But we're still selling a lot of x86 cores too for our customers, and we think we're the best place to do that. We're not competing with these companies, but we're treating them as good suppliers, and we have a lot of business to do together.
How important is Intel going forward?
They will for sure continue to be a great partner for AWS. There are a lot of use cases that run really well on Intel cores. We're still deploying them. There's no intention to stop. It's really following customer demand.
Is AWS still considering selling AMD's AI chips?
AMD is a great partner for AWS. We sell a lot of AMD CPUs to customers as instances.
The machine-learning product line is always under consideration. If customers strongly indicate that they need it, then there's no reason not to deploy it.
And you're not seeing that yet for AMD's AI chips?
Not yet.
How supportive are Amazon CEO Andy Jassy and Garman of the AI chip business?
They're very supportive. We meet them on a regular basis. There's a lot of focus across leadership in the company to make sure that the customers who need ML solutions get them.
There's also a lot of collaboration within the company with science and service teams that are building solutions on those chips. Other teams within Amazon, like Rufus, the AI assistant available to all Amazon customers, run entirely on Inferentia and Trainium chips.
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Former Intel CEO Pat Gelsinger holding up a chip at a US Senate hearing.
Getty
Intel's CEO departure reignited debate on splitting its factories from the company.
Intel's fabs are costly, but they're also considered vital for US national security.
CHIPS Act funding requires Intel to maintain majority control of its foundry.
One central question has been hanging over Intel for months: Should the 56-year-old Silicon Valley legend separate its chip factories, or fabs, from the rest of the company?
Intel's departing CEO, Pat Gelsinger, has opposed that strategy. As a longtime champion of the company's chip manufacturing efforts, he was reluctant to split it.
The company has taken some steps to look into this strategy. Bloomberg reported in August that Intel had hired bankers to help consider several options, including splitting off the fabs from the rest of Intel. The company also announced in September that it would establish its Foundry business as a separate subsidiary within the company.
Gelsinger's departure from the company, announced Monday, has reopened the question, although the calculus is more complicated than simple dollars and cents.
Splitting the fabs from the rest of its business could help Intel improve its balance sheet. It likely won't be easy since Intel was awarded $7.9 billion in CHIPS and Science Act funding, and it's required to maintain majority control of its foundries.
Intel declined to comment for this story.
A breakup could make Intel more competitive
Politically, fabs are important to Intel's place in the American economy and allow the US to reduce dependence on foreign manufacturers. At the same time, they drag down the company's balance sheet. Intel's foundry, the line of business that manufactures chips, has posted losses for years.
Fabs are immensely hard work. They're expensive to build and operate, and they require a level of precision beyond most other types of manufacturing.
Intel could benefit from a split, and the company maintains meaningful market share in its computing and traditional (not AI) data center businesses. Amid the broader CEO search, Intel also elevated executive Michelle Johnston Holthaus to CEO of Intel Products and the company's co-CEO. Analysts said this could better set up a split.
Regardless, analysts said finding new leadership for the fabs will be challenging.
"The choice for any new CEO would seem to center on what to do with the fabs," Bernstein analysts wrote in a note to investors after the announcement of Gelsinger's departure.
On one hand, the fabs are "deadweight" for Intel, the Bernstein analysts wrote. On the other hand, "scrapping them would also be fraught with difficulties around the product road map, outsourcing strategy, CHIPS Act and political navigation, etc. There don't seem to be any easy answers here, so whoever winds up filling the slot looks in for a tough ride," the analysts continued.
Intel's competitors and contemporaries are avoiding the hassle of owning and operating a fab. The world's leading chip design firm, Nvidia, outsources all its manufacturing. Its runner-up, AMD, experienced similar woes when it owned fabs, eventually spinning them out in 2009.
Intel has also outsourced some chip manufacturing to rival TSMC in recent years — which sends a negative signal to the market about its own fabs.
Intel is getting CHIPS Act funding
Ownership of the fabs and CHIPS Act funding are highly intertwined. Intel must retain majority control of the foundry to continue receiving CHIPS Act funding and benefits, a November regulatory filing said.
Intel could separate its foundry business while maintaining majority control, said Dan Newman, CEO of The Futurum Group. Still, the CHIPS Act remains key to Intel's future.
"If you add it all up, it equates to roughly $40 billion in loans, tax exemptions, and grants — so quite significant," said Logan Purk, a senior research analyst at Edward Jones.
"Only a small slice of the commitment has come, though," he continued.
Intel's fabs need more customers
Intel is attempting to move beyond manufacturing its own chips to becoming a contract manufacturer. Amazon has already signed on as a customer. Though bringing in more manufacturing customers could mean more revenue, it first requires more investment.
There's a more ephemeral reason Intel might want separation between its Foundry and its chip design businesses, too. Foundries regularly deal with many competing clients.
"One of the big concerns for the fabless designers is any sort of information leakage," Newman said.
"The products department competes with many potential clients of the foundry. You want separation," he added.
It was once rumored that a third party might buy Intel. Analysts have balked at the prospect for political and financial reasons, particularly since running the fabs is a major challenge.
Donald Trump has previously called China the "main threat" to the US AI industry.
iStock; Rebecca Zisser/BI
China's Ministry of Commerce said on Tuesday it will halt shipments of key materials to the US.
The ban includes materials that are used in semiconductors, batteries, and solar panels.
China's Ministry of Commerce said it was responding to fresh US chip export bans, announced Monday.
China has retaliated against the Biden administration's semiconductor export controls by banning shipments of key materials to the US, ramping up the global chip war ahead of Donald Trump's second term.
China's Ministry of Commerce said on Tuesday it would halt exports to the US of items relating to minerals and metals that can be used for both civilian and military purposes.
The so-called "dual-use" materials include gallium, germanium, antimony, and superhard materials. The announcement also included stricter export controls for items related to graphite, a highly conductive "wonder material." These materials are used to build semiconductors, batteries, advanced electronics, and solar panels.
China and the US have been locked in a technological race to the top over AI and military tech. Blocking the movement of materials essential to these industries is the latest tactic to be deployed.
The US is heavily dependent on China for gallium and antimony imports. While the US produces some germanium, China produces 98% of the world's supply, according to the US Geological Survey. The government agency published research in November that said losing access to germanium and gallium imports could add up to "billions of dollars in losses" across the US economy, with the fallout concentrated most in the semiconductor industry.
China's retaliation follows President Joe Biden's third wave of sanctions against US companies exporting materials to China's chip industry, announced on Monday. The ruling restricted US exports to 140 Chinese companies, including Huawei and Semiconductor Manufacturing International Corp.
"The US has broadened the concept of national security, politicizing and weaponizing trade and technology issues, and abused export control measures," China's commerce ministry said in a statement, adding that the measures are effective immediately and are being implemented to "safeguard national security."
On Sunday, Gina Raimondo, the US's commerce secretary, told reporters at Reuters, The New York Times, and others, that Biden'slatest restrictions are "the strongest controls ever enacted by the US to degrade the People's Republic of China's ability to make the most advanced chips that they're using in their military modernization."
Trump has indicated that he'll continue to pressure China's tech industry.In Trump's first term in office, he placed up to 25% tariffs on Chinese goods. During his 2024 presidential campaign trail, Trump said he would bump that number up to 60% if necessary. And in a June interview with the social-media personality Logan Paul, Trump called China the "main threat" to the US AI industry.
The Department for Commerce did not immediately respond to a Business Insider request for comment, made outside normal business hours.
Tenstorrent, a startup computing company, just closed its latest funding round.
Vladimir Gerdo\TASS via Getty Images
Tenstorrent just closed its latest funding round, valuing the company at about $2.6 billion.
The startup computing company aims to rival Nvidia with more affordable AI chips and processing.
The nearly $700 million round attracted investors Samsung, Bezos Expeditions, and LG Electronics.
In its latest funding round, Tenstorrent, a startup computing company that builds powerful AI hardware and software to compete with Nvidia, attracted big-name investors — including Jeff Bezos and Samsung.
A company statement released Monday said its Series D funding round raised $693 million, valuing the AI chip startup at about $2.6 billion, per Bloomberg. Samsung Securities and AFW Partners, a venture capital investment firm based in Seoul, led the round, along with Bezos Expeditions, LG Electronics, and Hyundai Motor Group, among other investors, Tenstorrent announced.
"We are excited by the breadth of investors that believe in our vision," Tenstorrent COO Keith Witek said in the statement. "If you look at this group, you see a balance of financial investors and strategic investors, as well as some notable individuals that have conviction in our plans for AI. They respect our team, our technology, and our vision. They see the ~$150M in deals closed as a strong signal of commercial traction and opportunity in the market."
Tenstorrent was founded in 2016 by Ljubisa Bajic, Ivan Hamer, and Milos Trajkovic. In 2020, Jim Keller, a prolific microprocessor engineer known for his work at Apple and Tesla, joined the company as its chief technology officer and became CEO in 2023. The operation, with 10 offices worldwide, builds AI hardware, offers open-source software for chip builders, and licenses products to clients who want to design their own silicon.
While still a fraction of the size of Nvidia, Tenstorrent aims to siphon off a portion of the chipmaking giant's massive market share by offering increased interoperability with other tech providers using an open-source approach that relies on more commonplace technology, Bloomberg reported.
Tenstorrent advocates the use of an open standard instruction set architecture called RISC-V. Designed by computer scientists at the University of California, Berkeley, RISC-V defines how software controls the CPU in a computer and is offered under royalty-free open-source licenses.
Nvidia's approach has instead focused more on the proprietary, from its chips to specific data center layouts, making it difficult for some of Nvidia's customers to switch to chips from competing companies without incurring tremendous costs.
"In the past, I worked with proprietary tech, and it was really tough," Keller told Bloomberg. "Open source helps you build a bigger platform. It attracts engineers. And yes, it's a little bit of a passion project."
A spokesperson for Nvidia declined to comment. Representatives for Tenstorrent, Samsung, and Bezos Expeditions did not immediately respond to requests for comment from Business Insider.
Intel CEO Pat Gelsinger delivers a speech at Taipei Nangang Exhibition Center during Computex 2024, in Taipei on June 4, 2024.
I-Hwa CHENG / AFP
Intel CEO Pat Gelsinger is out of the top spot after a challenging 4-year tenure.
The company's interim co-CEOs addressed the workforce Monday morning in an all-hands meeting.
One Intel employee described the responses to questions as "vague" and the tone of the meeting as "damage control".
On Monday morning, Intel employees joined an all-hands meeting after receiving an email invite at 5 a.m. PT.
Accompanying the invite was the news that the company's CEO Pat Gelsinger had stepped down as of Sunday, and would be temporarily replaced by co-CEOs David Zinsner, Intel's chief financial officer for nearly three years, and Michelle Johnston Holthaus, the new CEO of product.
Gelsinger's move came without warning. He isn't staying on to transition out slowly or help with the search for his replacement. Come 9 a.m. the pair of fresh co-CEOs were bombarded with questions.
Why did Gelsinger leave so suddenly? What kind of CEO is Intel trying to get now? How can employees trust leadership after repeated missteps?, employees asked.
The man at the center of the conversation was not there. Being CEO of Intel was Pat Gelsinger's dream since he joined the company as a teenager in 1979. He achieved it improbably after being ousted once already.
"He was the prodigal son returning," described Alvin Nguyen, senior analyst at Forrester. Gelsinger returned a savior, but now he's retiring at 63 and Intel is far from saved. Multiple outlets reported Monday that Gelsinger's departure is the result of board rancor, with Bloomberg reporting that the CEO was given the choice to retire or be removed from the job.
Gelsinger's departure was a "personal decision", executives repeated in the all-hands, according to a current employee in attendance.
Intel's interim leadership brings deep knowledge of the company's finances, products, and customers.
Zisner has overseen the recent cost-cutting effort, and Holthaus has been steeped in Intel for nearly 20 years. But no one at the top has the technical expertise of Gelsinger, which Intel employees pointed out in their questions. Yet despite his technical prowess as Intel's first chief technology officer, Intel remains in critical condition.
The leaders emphasized that the company goals would not change: employees would improve efficiency and, reduce costs, and the company would need to execute better with products and with the crucial 18A process.
Holthaus told employees on the call that her leadership style is direct and transparent, according to the employee in attendance. She reminded them that she has worked at Intel for many years.
Intel declined to comment, but a spokesperson pointed to Gelsinger's departure press release.
Contending with Intel's many misses
Intel has more than 65% of the market for traditional PCs and 85% of the server market, according to Edward Jones. Yet critical missteps plague the company. Zisner and Holthaus likely can't wait for an executive search to conclude to address them.
Supporting the passage of the CHIPS Act and obtaining its promised funding has been a major focus of Gelsinger's nearly 4-year term as CEO. However, the funding is contingent upon hitting execution benchmarks, with which the company has struggled.
Last week, the Department of Commerce finalized its direct funding for Intel under the CHIPS Act, totaling $7.865 billion. Said funding fell short of the original amount of $8.5 billion announced.
"While we have made significant progress in regaining manufacturing competitiveness and building the capabilities to be a world-class foundry, we know that we have much more work to do at the company and are committed to restoring investor confidence," said Frank Yeary, now Intel's interim board executive chair, said in a statement.
Intel's overall fall from grace is most apparent in the context of the rise in the importance of accelerated computing and AI.
In 2021, when Gelsinger took over as CEO, shares of Nvidia were trading below $30. The GPU designer's recent rise to one of the most valuable companies in the world has put a spotlight on Intel's relative absence from the accelerated computing race that Nvidia has come to dominate. Median pay at Intel has remained stagnant the last five years compared to other competitors as employee cuts continue.
Gelsinger said last month that the company would miss its target of $500 million in sales this year of its AI chip, Gaudi 3. But analysts told Business Insider that 18A, the company's most advanced manufacturing node, is actually more important to Intel's resurgence than making a splash in AI.
"Intel has ostensibly 'bet' the company on 18A for salvation," Bernstein analysts wrote.
The costs of bringing this node online are likely to increase further, and it "still to get any external validation from large fabless customers," according to Bank of America analyst Vivek Arya. But this expensive work is essential to bring Intel back to the cutting edge and make it an attractive partner for bleeding-edge chip designers like Nvidia.
"The importance of bringing manufacturing back in-house can't be overstated," Futurum Group CEO Daniel Newman told BI. The fate of the company, and the legacy of Gelsinger rides on it.
"The cornerstone of Pat's tenure as CEO was built upon Intel achieving process leadership or at least parity and if they cannot execute with 18A, then it was all for naught," Logan Purk, senior research analyst at Edward Jones, told BI. Given slow-moving technological progress and cost-cutting, and fast-moving competitors, Intel's next CEO may be inheriting a harder job than Gelsinger did.
"It was a tough situation when Pat showed up, and things look much worse now," Bernstein analysts wrote in a note to investors.
No one has been a closer witness to this roller coaster than Intel employees, who have seen multiple waves of layoffs and buyouts.
Monday's meeting had the distinct flavor of "damage control", according to the employee.
Intel shares were down 60% Monday, compared to the day Gelsinger took the CEO job. However, shares jumped slightly upon Monday's announcement of Gelsinger's retirement.
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Donald Trump has described China as the "main threat" to the US AI industry.
iStock; Rebecca Zisser/BI
The US has introduced new export controls on China's semiconductor industry, targeting 140 firms.
They aim to curb China's AI and defense-tech growth, partly because of national security concerns.
Trump has called China the "main threat" to the US AI industry.
The US announced on Monday another round of export controls on China's semiconductor industry, multiple outlets reported, weeks ahead of Donald Trump's second term.
Washington plans to restrict exports to 140 Chinese companies, including the chip-equipment heavyweight Naura Technology Group, to curb China's growing capabilities in artificial intelligence and defense technology.
It is the third crackdown the US has initiated on China's chipmaking industry since October 2022. The move is set to also stop the export of advanced high-bandwidth memory, a key component in the development of AI chips in China.
The chip manufacturers Semiconductor Manufacturing International Corp. and Huawei are also on the list of 140 companies.
"They're the strongest controls ever enacted by the US to degrade the People's Republic of China's ability to make the most advanced chips that they're using in their military modernization," Gina Raimondo, the US's commerce secretary, told reporters from the Financial Times, The New York Times, and others on Sunday.
The US has long been embroiled in a technological race against China, which developing AI and military tech at pace.
The Biden administration's latest sanctions are partly driven by national security concerns that China's access to high-quality chips could allow it to bolster its military applications, especially through the use of AI.
Last month, Reuters reported that researchers in China affiliated with the People's Liberation Army had used Meta's open-source AI model Llama to develop an AI tool that could be applied to military use cases.
While this latest wave of measures is from the Biden administration, Beijing reportedly anticipates further sanctions from Trump. China has been attempting to stockpile chips from the US in recent months, with purchases reaching $1.11 billion in October, an analysis of customs data from the South China Morning Post found.
Previous comments from Trump suggest he's aligned with the Biden administration when it comes to thwarting China's AI growth. In a June interview with the social-media personality Logan Paul, Trump billed China as the "main threat" to the US AI industry. "We have to be at the forefront," he said.
There are still some internal disagreements about the approach to restricting Huawei chip-production facilities, the Financial Times said. Some of the Chinese tech giant's chip-production plants were not included on the list, with one person close to the discussions telling the FT that they were not in operation, so it's not clear whether they would be used for the production of advanced chips.
Mao Ning, a spokesperson for China's foreign ministry, said at a press conference earlier this month, "China is firmly opposed to the US overstretching the concept of national security, abusing export control measures, and making malicious attempts to block and suppress China."
The US Department of Commerce didn't immediately respond to a request for comment from Business Insider made outside normal working hours.
SolidIntel CEO advises clients on derisking supply chains amid tariff concerns.
China's dominance in rare earth minerals poses risks to tech supply chains.
Friend-shoring and nearshoring are strategies to enhance national security and tech resilience.
Megan Reiss has been very busy since the election. The CEO and founder of SolidIntel, a D.C.-based supply chain advisory firm, has been fielding calls from current and prospective clients looking to understand what Trump's second term could mean for their manufacturing, supply, raw materials, foundry, and businesses across sectors.
SolidIntel's clients also want to know how to derisk their operations as talk of tariffs sends markets into a volatile turn.
"People concerned about tariffs are very interested in moving their supply chains out of China as quickly as possible because they see it as the potential for everything to get really expensive, really quickly," Reiss told Business Insider.
The rare earth minerals and raw materials underpinning the AI boom and its countless clusters of chips may soon be in the spotlight because of where they're produced. Though President-elect Trump's Monday post named Mexico and Canada, all eyes are on China.
"Our technology is dependent on these rare earth minerals. China has a lot of opportunity to turn off the spigot," Reiss said.
Friend shoring to allies
Friend shoring, or moving supply chain, manufacturing, and operations to non-adversarial countries to have continuity, is one step to derisking tech's supply chain.
The potential for export controls and sanctions are also top of mind for SolidIntel's rare earth mineral clients. These raw materials serve as the building blocks for wafters, and semiconductors that power advanced AI chips. The vast majority of these minerals are commercially mined in China or quarries owned by Chinese companies.
Rare earth minerals used to make AI chips are almost exclusively imported from China.
Department of the Interior
In 2023, the U.S. imported more than 95% of rare earth compounds and minerals from China, Malaysia, Estonia, and Japan, according to the U.S. Department of the Interior.
Nearshoring and friend-shoring manufacturing and vital supply chains away from China are also important for national security and could bolster a sovereign tech sector. The near-term investment is difficult but ultimately more beneficial in the long term.
Since 2023, SolidIntel, which uses generative AI and machine learning to identify supply chain risks, has helped companies track how bad actors end up in supply chains and connects companies with compliant suppliers.
"The more these supply chains are not hung over our head, and we make national security choices that are in the best interest of the U.S., the less afraid we are that an adversary is going to try to kill our commercial sector, that's a good thing," Reiss said.
There are closer to home alternatives that could become more viable depending on the incoming administration's policies, how relations with China play out, and if Trump makes good on his tariffs talk.
"My fear is not that we will not find alternative sources because there are a lot of rare earth minerals, and they're not just in the U.S.; they're in friendly and allied countries. I'm worried about us doing it fast enough. It can take a decade or more to bring a mine online, and it can't take that long in this case," Reiss said.
Create redundancy in manufacturing
To derisk the supply chain, create redundancy. In other words, reducing parts of supply chains that are dependent on one country is a way to cut down on risks and diversify manufacturers' options.
"If I were a manufacturer and I had a couple of chokepoints in my supply, say two of three, difficult-to-source parts that are only produced in a couple of countries, you would ideally want to have production lines in multiple countries," Reiss said.
Though streamlining production to fewer or one country can be cheaper and more efficient, it only works until something goes wrong she said.
Regulation of the supply chain may increase, but tech companies and their suppliers could find solutions in data. "Technology cannot do it unto itself, because you can only rely on the data you can get to understand the whole length of the supply chain. It's about open-sourced intelligence and closed data sets, " Reiss said.
"It's not just 'is this a foreign manufacturer, it's 'what are the foreign ownership control and influence risks in partnering with a company or in having a certain investor," Reiss said. "There's a lot more to it that people are just starting to build out their understanding of."
Nvidia's workforce has increased more than 20-fold in the last twenty years.
Anna Kim/Getty, Tyler Le/BI
Nvidia's workforce has grown nearly 20-fold since 2003.
The company's stock price surge and low turnover have enriched many long-term employees.
Nvidia's median salary now surpasses Microsoft's and other Silicon Valley peers.
Nvidia was largely unknown just a few years ago.
In 2022, google searches for Jensen Huang, the company's charismatic CEO, were almost nonexistent. And Nvidia employees were not nearly the source of fascination and interest they are today.
Nvidia recruiters are now swamped at conferences, and platforms like Reddit and Blind are full of eager posters wondering how to land a job or at least get an interview at the company, which has around 30,000 employees.
They want to know how many Nvidians are millionaires — likely quite a few.
The skyrocketing stock price has made that the case, but so has the longevity of its employees. Twenty-year-plus tenures are not uncommon, and even now when AI talent has never been more prized, staff turnover has been falling in recent years. In January, the company reported a turnover rate of 2.7%. Tech industry turnover below 20% is notable, an HR firm told Business Insider earlier this year.
The data behind the evolution of Nvidia's workforce tells the story of the company's meteoric rise just as well, if not better than the revenue or stock price. Until the early 2000s, the chip design company, which was founded in 1993, was relatively under the radar.Here is Nvidia's story in four charts.
Nvidia's workforce has grown nearly 20-fold since 2003
Beyond Nvidia's historic rise in market value, the company has a lot to offer employees. It maintains a permissive remote work policy even as tech giants like Amazon mandate a return to the office. It has also built an appropriately futuristic new Santa Clara, California, headquarters which robotics leader Rev Lebaredian described to Business Insider as so tech-infused it is a "type of robot."
But the culture isn't for everyone.
Publicfeedback, for example, is a very intentional part of the workplace culture. Huang famously has dozens of direct reports and eschews one-on-one meetings, preferring to call out mistakes in public rather than saving harsh feedback for private conversation, so that everyone can learn.
Nvidia has become one of the best-paying firms in Silicon Valley
Four years ago, Nvidians' median salary wasn't at the top of the market. In 2019, Microsoft's median employee salary was nearly $20,000 higher than an Nvidia worker. But as of January 2024, Nvidia's median salary (excluding the CEO) surpassed Microsoft and has left other tech giants in the dust.
Yet, this chart only reports on base compensation.
Years of stock-based compensation and "special Jensen grants," along with four-digit growth in the stock price within the last decade, have led to wealthy employees and, at times, internal tension surrounding rich Nvidia employees not pulling their weight.
Nvidia's GPUs are capable of immense computing capacity at nearly unprecedented speed because they perform calculations simultaneously rather than one at a time. Instructing these powerful chips required a new software paradigm.
CUDA is that paradigm and building it took years and cost Nvidia dearly. In hindsight, the benefit of this investment period is undeniable. CUDA is the main element that keeps AI builders from easily or willingly switching to competing hardware like AMD's MI325 and Amazon's Trainium chips.
It's not a literal translation of every employee's contribution, but looking at the revenue-to-headcount ratio can show trends in efficiency, investment, and return.
Nvidia's revenue-to-headcount ratio showed a downward trend from 2003 until 2014, and then steady upward progress until the AI boom in 2023. During that year, this ratio doubled.
CUDA is likely not the only factor affecting this data point, but it may help explain why investors questioned CUDA expenditures for years — and why they no longer do.
But the company isn't as far ahead in other areas.
Nvidia has less than one in five women employees — but it has pay parity
Despite the dizzying progress of Nvidia's technological achievements, gender representation in the company's workforce and the semiconductor industry as a whole has remained relatively unchanged in the last decade. As of January 2024, Nvidia's global workforce was 19.7% female.
Nvidia's stats are in line with the industry totals for female representation, but ahead of the pack when it comes to women in technical and management positions.
According to a 2023 Accenture analysis, the median representation of women in the semiconductor industry is between 20% and 29%, up from between 20% and 25% in 2022. Over half of the companies in the sample reported less than 10% representation of women in technical director roles and less than 5% in technical executive leadership roles.
In January Nvidia reported that women at the company make 99.5% of what men make in terms of baseline compensation. For the last two years, the turnover rate for women at the company has been slightly lower than that for men.
Intel is getting $7.9 billion in federal grants from the Biden administration.
The US Department of Commerce announced the grant, part of the CHIPS Act, on Tuesday.
President-elect Donald Trump has criticized the CHIPS Act in favor of tariffs.
Intel is receiving about $7.9 billion in federal grants, the US Department of Commerce said Tuesday, as the Biden administration finalizes CHIPS Act agreements ahead of Donald Trump taking office.
It is $600 million less than President Joe Biden's $8.5 billion preliminary grant announced in March. Intel is receiving less than what was initially promised because it also received a separate grant of $3 billion to produce chips for the military, the Department of Commerce told The New York Times.
The chip giant is on track to receive at least $1 billion of the total grant award before the end of this year, a senior administration official told Bloomberg.
President-elect Trump has previously criticized the CHIPS Act and suggested he would prefer tariffs to incentivize semiconductor manufacturing on US soil. This has caused the Biden administration to scramble to finalize billions of dollars in payments before the end of the year.
The CHIPS Act cash will help Intel boost its semiconductor production in the US. It is expected to invest nearly $90 billion in the US by the end of the decade.
US Secretary of Commerce Gina Raimondo said in a press release that Intel's investments across Arizona, New Mexico, Ohio, and Oregon would "supercharge American innovation" and that the company is playing an important part in the "revitalization" of the semiconductor industry in the US.
"Strong bipartisan support for restoring American technology and manufacturing leadership is driving historic investments that are critical to the country's long-term economic growth and national security," added Intel CEO Pat Gelsinger.
Intel's share price is down by almost 50% this year. It has racked up billions in losses and faced a series of challenges, including layoffs.
The Wall Street Journal reported in September that Qualcomm was interested in acquiring Intel. However, its takeover interest has since cooled as a result of some complications related to acquiring the entire company, Bloomberg reported on Tuesday, citing people familiar with the matter.
Intel didn't immediately respond to Business Insider's request for comment, made outside normal working hours.
Experts told BI that TSMC's most advanced chips will likely continue to be produced in Taiwan.
Taiwan's central role in a crucial global industry could help it secure support from the US.
Some US businesses are likely to continue depending on TSMC chips made in Taiwan for the foreseeable future, even as the company builds factories in Arizona.
On November 15, the Biden administration announced that the Commerce Department had awarded TSMC — the world's leading chipmaker — with up to $6.6 billion in funding to aid the construction of three chip factories in Phoenix. The first factory is expected to begin full productionlevelsin early 2025.
In a press release, the Biden administration said the announcement was "among the most critical milestones yet" in the implementation of the CHIPS Act. Supportersof the law hope it will create US jobs, secure supply chains, and make the US less reliant on advanced chips from Taiwan — which faces the possible threat of a Chinese invasion. TSMC produces an estimated 90% of the world's advanced chips, which power everything from iPhones to cars.
While TSMC's Phoenix factories are expected to boost semiconductor chip production in the US, the company isn't making its most advanced chips stateside, industry experts told Business Insider.
Jeff Koch, an analyst at the semiconductor research and consulting firm SemiAnalysis, told BI that chips made in TSMC's US factories are expected to be one to two levels behind the company's more advanced Taiwan-made chips. For example, chips produced using 4 nanometer (nm) technology are expected to be made in the first Phoenix factory, while TSMC's Taiwan factories are already producing chips using 3nm technology. The smaller the nanometer number, the more transistors manufacturers can fit on a chip, making it more powerful and energy-efficient.
While 3nm chips are expected to be produced in TSMC's second Arizona factory — which is slated to begin full production in 2028 — Koch said this would likely come after the production of 2nm chips begins in Taiwan, which is estimated to happennext year, according to TSMC.
Stephen Ezell, the vice president for global innovation policy at the Information Technology and Innovation Foundation, told BI that by the time TSMC's Phoenix factory starts making 2nm chips, he'd expect the companyto be producing even more advancedchips in Taiwan.
"The United States will be dependent on chips from Taiwan for a long time to come," he said. "Even if the CHIPS Act is wildly successful, it'll barely get the US back to 17% to 20% of global chip production." The US currently produces about 10% of the world's chips.
The Department of Commerce told BI that as TSMC's Arizona fabs become operational, it expects to see the production of TSMC's most advanced chips transition into the US over the coming years.
TSMC declined to comment on whether the company's most advanced chips will continue to be produced in Taiwan.
Keeping TSMC's most advanced chips in Taiwan gives the island leverage
Companies that prefer to use the most cutting-edge technology — like Nvidia, Apple, Qualcomm, and AMD — will likely continue to source chips from Taiwan, said Chris Miller, a nonresident senior fellow at the American Enterprise Institute who focuses on semiconductors.
"I think TSMC's plants in Arizona are significant, but given current policies and investment trends, the US will be using large volumes of chips made in Taiwan for many years into the future," added Miller, who is the author of "Chip War: The Fight for the World's Most Critical Technology,"
TSMC's most advanced chips are made first in Taiwan, in part, because that is where the company conducts its research and development — which makes it easier to roll out more sophisticated technologies. Additionally, keeping that level of production in Taiwan could help the island retain its essential role in the chipmaking industry, which is crucial to the global economy, Koch said.
He added that this dynamic could make the US more likely to provide Taiwan with military support if China invaded.
"It's very unlikely that the Taiwanese government would allow TSMC to build its most advanced fabs in the US without a few years' lag," he said, adding, "This is Taiwan's most valuable strategic capability. Without it, extracting a US security guarantee or support from the Trump administration goes from hard to impossible."
William Alan Reinsch, a senior advisor at the Center for Strategic and International Studies, a national security think tank, told BI the Biden administration's goal was to boost domestic chip production — not to completely erase US businesses' reliance on foreign-made chips.
What's more, efforts to develop and foster the US semiconductor industry could help protect America's supply chains from geopolitical events, even if some US businesses continue to source chips from Taiwan.
Do you work in the US semiconductor industry? Reach out to this reporter at [email protected].
Intel CEO Pat Gelsinger speaks before President Joe Biden's remarks at Intel Ocotillo Campus on March 20, 2024 in Chandler, Arizona.
Rebecca Noble/Getty Images
The CHIPS and Science Act, offering over $30 billion in incentives, spurred semiconductor lobbying.
Nvidia, TSMC, and Intel are enhancing government relations amid evolving trade policies.
Most heads of government relations and lobbyists are part of the "revolving door."
In 2022, Nvidia spent $90,000 on lobbying in Washington. In 2023, that number quintupled to more than $500,000.
While Big Tech companies have spent millions lobbying in Washington, DC, on issues such as AI and antitrust regulation, the CHIPS and Science Act, which is set to give out more than $30 billion in incentives funding to chip companies, kicked things into high gear for the semiconductor industry. The Department of Commerce said in November that Intel will receive about $7.9 billion in federal grants.
American manufacturers like Intel and Micron boosted their lobbying funding, while foreign companies like TSMC assembled their DC-based government relations teams in response. And while chip designers like Nvidia and AMD are not direct CHIPS Act funding recipients, they hold an interest in shifting manufacturing dependence on TSMC in case of any geopolitical conflicts in Taiwan.
Business Insider reviewed lobbying public disclosure reports associated with various chip companies and focused on the top listed lobbyists and governmental affairs departments. Most members were part of the "revolving door," switching from staffing on the hill, campaigns, and other agencies to the private sector.
"Given that more government policies are impacting the chip industry relative to several years ago–tariffs, incentives, tax policies, etc.— it isn't surprising that the chip industry is focusing more on this," said Chris Miller, the author of the book "Chip War: The Fight for the World's Most Critical Technology."
President Joe Biden's administration has scrambled to finalize CHIPS Act funding since the election of Donald Trump, who advocated for higher tariffs and attacked the bipartisan legislation in an interview with Joe Rogan in October.
A Department of Commerce spokesperson said in November that the department has awarded over $10 billion so far and expects to allocate all incentives funds this year.
Companies will push to finalize their CHIPS Act grants in the short term and try to build more connections with Republican policymakers in the long term, said Lori Yue, an associate management professor at Columbia Business School who studies corporate political strategy.
"Government change would definitely affect lobbying as the executive branch has a lot of power in terms of regulation," she said.
The Department of Commerce spokesperson said that the due diligence and negotiation processes for finalizing funding are "bespoke" for each applicant. The spokesperson declined to comment on chip lobbying efforts and the specifics of individual CHIPS applicants.
Yue said that hiring lobbyists depends on what expertise and networks they already have.
"For example, they have worked on certain governmental issues before. They really know every single regulatory procedure on this issue. That person can be very valuable. Besides what they know is who they know: how can this person bring the company's perspective to the policymakers and connect to the person in power?" said Yue.
Trump nominated Howard Lutnick, CEO of investment bank Cantor Fitzgerald and an advocate for tariffs, as his commerce secretary.
Nvidia
Nvidia CEO Jensen Huang.
Chip Somodevilla/Getty Images
Lobbying spend in 2024: $480,000
Top firms: Nickles Group, Tiber Creek Group
Current top lobbyists: Luke Holland, Don Kent, Jeff Choudhry
While Nvidia employs its own government affairs office, it uses outside firms rather than in-house lobbyists. The Nickles Group was founded by former Oklahoma Republican Sen. Don Nickles, who served 24 years in Congress and focused heavily on deregulation and tax reduction for businesses.
Luke Holland previously served as chief of staff to Republican Sen. Jim Inhofe of Oklahoma. Holland's practice focuses on areas such as aviation, defense, and trade.
Before transitioning to The Nickles Group, Jeff Choudhry worked on Capitol Hill for Arizona's Republican Rep. Trent Franks, acting as a liaison to the House Judiciary Committee. He focused on issues such as interstate commerce, taxation, bankruptcy, and other commercial law. His practice now focuses on antitrust, mergers and acquisitions, IT, and foreign policy related to China.
Don Kent has served in a wide range of positions within the legislative and executive branches in Washington. His practice draws from working at the Department of Homeland Security, at the US Senate Budget Committee, and with senators, focusing on immigration, foreign relations, and technology.
Nvidia declined to comment beyond public filings.
TSMC
President Joe Biden tours the building site for a new computer chip plant for Taiwan Semiconductor Manufacturing Company, Tuesday, Dec. 6, 2022, in Phoenix.
AP Photo/Patrick Semansky, File
Lobbying spend in 2024: $2.32 million
Top firms: TSMC government affairs
Current top lobbyists: Peter Cleveland, Nicholas Montella, Claire Sanderson Hambrick, Stefanie Dearie
CHIPS Act recipient amount: $6.6 billion, finalized November 15
Top issues: CHIPS and Science Act implementation, US-Taiwan relations, investment taxes, tax reductions for Taiwanese residents, export and trade regulations, immigration, workforce development, environmental permits for chip factories
TSMC expanded its US-based government relations department to address the rise in US-China trade tensions and the ban on exports to Huawei. One of the company's first hires was Peter Cleveland, a former Intel lobbyist for over a decade, who took on the position of senior vice president. Before working for Intel, Cleveland worked with former Democratic Senators Dianne Feinstein and Chuck Robb.
Other TSMC lobbyists bring experience dealing with Asia-Pacific affairs. Nicholas Montella began his career working as an ESL instructor in China and South Korea before shifting to Washington. He ultimately served as the director of Japan, Korea, and APEC policy in the US Chamber of Commerce.
Claire Sanderson Hambrick served as a lead policy advisor for Texas Republican Sen. John Cornyn, working on legislation such as the CHIPS for America Act and the Secure 5G and Beyond Act.
Stefanie Dearie is a former Hill staffer who focused on monetary policy and trade. She worked at Accenture's government relations team before joining TSMC as a senior counsel.
TSMC declined to comment on its lobbying efforts.
Intel
Intel CEO Pat Gelsinger.
The Washington Post/The Washington Post via Getty Images
Lobbying spend in 2024: $5.22 million
Top firms: Intel government affairs
Current top lobbyists: Allen Thompson, Eminence Griffin, David Shahoulian, Jordan Haas, Shannon Taylor
For the last decade, Intel has consistently spent more than $3 million lobbying annually. Its $7.08 million efforts in 2022 were likely rewarded when the Department of Commerce announced it would award Intel $8.5 billion to expand its factories across the country.
Former Raytheon government relations director Allen Thompson joined Intel in 2020 to serve as the company's vice president of US-Canada Government Relations. Thompson is a seasoned veteran in securing funding. At Raytheon, he helped secure over $20 million for Navy and aerospace projects. A former Hill staffer, he also worked on tech lobbying projects at Mehlman Consulting and served in the US Coast Guard's intelligence unit.
Intel splits its government affairs advocacy into different focus areas. David Shahoulian oversees workforce policy and brings experience working in general counsel roles for the House Judiciary Committee and the US Department of Homeland Security.
Shannon Taylor, who focuses on technology and manufacturing policy advocacy, worked as counsel for the US House of Representatives on the commerce and energy subcommittees before transitioning to government affairs at the Information Technology Industry Council, a special interest lobbying group for tech companies.
Fellow ITI alum Eminence Griffin, who focuses on public sector relations, worked as a procurement counsel for the House of Representatives and in government affairs at Dell.
Jordan Haas oversees trade policy advocacy, with past work experience at the Office of the US Trade Representative and the Department of Commerce.
Intel did not respond to a request for comment.
AMD
AMD CEO Lisa Su.
Steve Marcus/Reuters
Lobbying spend in 2024: $2.13 million
Top firms: AMD government relations and regulatory affairs, Forbes Tate Partners, Mehlman Consulting
Current top lobbyists: Jonathan Hoganson, Grant Gardner, Sarah Badawi
CHIPS Act recipient amount: N/A
Top issues: CHIPS and Science Act implementation, AI, tax credits, trade and outbound investments
AMD's lobbying spending trickled down to when the company underwent a business model transformation and then increased in 2018 when it pitched in $2.29 million, focusing on legislation related to foreign investment and energy research.
Jonathan Hoganson is AMD's corporate vice president of government relations and regulatory affairs. He previously spearheaded government affairs at Micron and worked under former Democratic Illinois Rep. Rahm Emanuel.
Grant Gardner is another AMD government relations director who worked at the Department of Commerce. He also holds many Republican Party connections; he was a legislative staff member under former Speaker of the House John Boehner and served as a special projects director for the Republican National Committee during Trump's 2016 election.
Before joining AMD's government relations team, Sarah Badawi served as a senior advisor and national deputy political director for Vermont Sen. Bernie Sanders during his 2020 campaign run. She also planned fundraising events for Elizabeth Warren's senatorial campaign in 2012 and then transitioned to work for the Progressive Change Campaign Committee, an organization that supports progressive down-ballot candidates.
AMD did not respond to a request for comment.
Micron
Micron expects to receive $6.1 billion in funding for factory expansions in Idaho and New York.
Current top lobbyists: Jon Dickinson, Bo Machayo, Jeff Wilson
CHIPS Act recipient amount: $6.1 billion, finalized December 10
Top issues: CHIPS and Science Act implementation, US-Taiwan relations, environmental permits for chips factories, research & development, manufacturing tax credits for semiconductors, US semiconductor competitiveness
In the last three years, Micron has hired Jon Dickinson and Bo Machayo to serve as vice president of global government affairs and head of US government affairs, respectively. Dickinson brings extensive California legislature staffing experience and a decade spent at HP leading government affairs. Machayo previously worked in the Senate, the Department of Homeland Security, and the White House, focusing on the economy, energy, and Africa.
Current top lobbyists: Jennifer Cetta, Kevin O'Hanlon, Holly Pataki
CHIPS Act recipient amount: $6.4 billion, not yet received
Top issues: electric vehicle policy, CHIPS and Science Act implementation, investment in the US by foreign companies, US-Korea relations
Samsung's Washington lobbying efforts span wider than other chip companies, given that the company is also involved in industries such as telecommunications. Jennifer Cetta is cited at the top of lobbying disclosures. She has served as director and senior counsel of government relations for Samsung for more than a decade.
A Micron government affairs alum, Holly Pataki began working for Samsung in 2022. She also previously worked for the National Republican Congressional Committee, advising fundraising campaign strategies for Republican legislators.
Kevin O'Hanlon began his career working for Democratic House representatives from North Carolina and Ohio before shifting to lobbying for the video games industry.
Samsung did not respond to a request for comment.
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Editor's note: This list was first published on November 23, 2024, and has been updated to reflect recent developments.
Dario Amodei, an OpenAI employee turned Anthropic CEO, at TechCrunch Disrupt 2023.
Kimberly White/Getty
Amazon on Friday announced another $4 billion investment in the AI startup Anthropic.
The deal includes an agreement for Anthropic to use Amazon's AI chips more.
The cloud giant is trying to challenge Nvidia and get developers to switch away from those GPUs.
Amazon's Trainium chips are about to get a lot busier — at least that's what Amazon hopes will happen after it pumps another $4 billion into the AI startup Anthropic.
The companies announced a huge new deal on Friday that brings Amazon's total investment in Anthropic to $8 billion. The goal of all this money is mainly to get Amazon's AI chips to be used more often to train and run large language models.
Anthropic said that in return for this cash injection, it would use AWS as its "primary cloud and training partner." It said it would also help Amazon design future Trainium chips and contribute to building out an Amazon AI-model-development platform called AWS Neuron.
This is an all-out assault on Nvidia, which dominates the AI chip market with its GPUs, servers, and CUDA platform. Nvidia's stock dropped by more than 3% on Friday after the Amazon-Anthropic news broke.
Earlier this week, Anthropic CEO Dario Amodei didn't sound like he was all in on Amazon's Trainium chips, despite another $4 billion coming his way.
"We use Nvidia, but we also use custom chips from both Google and Amazon," he said at the Cerebral Valley tech conference in San Francisco. "Different chips have different trade-offs. I think we're getting value from all of them."
In 2023, Amazon made its first investment in Anthropic, agreeing to put in $4 billion. That deal came with similar strings attached. At the time, Anthropic said that it would use Amazon's Trainium and Inferentia chips to build, train, and deploy future AI models and that the companies would collaborate on the development of chip technology.
It's unclear whether Anthropic followed through. The Information reported recently that Anthropic preferred to use Nvidia GPUs rather than Amazon AI chips. The publication said the talks about this latest investment focused on getting Anthropic more committed to using Amazon's offerings.
There are signs that Anthropic could be more committed now, after getting another $4 billion from Amazon.
In Friday's announcement, Anthropic said it was working with Amazon on its Neuron software, which offers the crucial connective tissue between the chip and the AI models. This competes with Nvidia's CUDA software stack, which is the real enabler of Nvidia's GPUs and makes these components very hard to swap out for other chips. Nvidia has a decadelong head start on CUDA, and competitors have found that difficult to overcome.
Anthropic's "deep technical collaboration" suggests a new level of commitment to using and improving Amazon's Trainium chips.
Though several companies make chips that compete with or even beat Nvidia's in certain elements of computing performance, no other chip has touched the company in terms of market or mind share.
Amazon's AI chip journey
Amazon is on a short list of cloud providers attempting to stock their data centers with their own AI chips and avoid spending heavily on Nvidia GPUs, which have profit margins that often exceed 70%.
Amazon debuted its Trainium and Inferentia chips — named after the training and inference tasks they're built for — in 2020.
The aim was to become less dependent on Nvidia and find a way to make cloud computing in the AI age cheaper.
"As customers approach higher scale in their implementations, they realize quickly that AI can get costly," Amazon CEO Andy Jassy said on the company's October earnings call. "It's why we've invested in our own custom silicon in Trainium for training and Inferentia for inference."
But like its many competitors, Amazon has found that breaking the industry's preference for Nvidia is difficult. Some say that's because of CUDA, which offers an abundant software stack with libraries, tools, and troubleshooting help galore. Others say it's simple habit or convention.
Jassy said in October that the next-generation Trainium 2 chip was ramping up. "We're seeing significant interest in these chips, and we've gone back to our manufacturing partners multiple times to produce much more than we'd originally planned," Jassy said.
Still, Anthropic's Amodei sounded this week like he was hedging his bets.
"We believe that our mission is best served by being an independent company," he said. "If you look at our position in the market and what we've been able to do, the independent partnerships we have Google, with Amazon, with others, I think this is very viable."
I-HWA CHENG/AFP via Getty Images; Justin Sullivan/Getty Images
Reports on an AI progress slowdown raised concerns about model scaling on Nvidia's earnings call.
An analyst questioned if models are plateauing and if Nvidia's Blackwell chips could help.
Huang said there are three elements in scaling and that each continues to advance.
If the foundation models driving the panicked rush toward generative AI stop improving, Nvidia will have a problem. Silicon Valley's whole value proposition is the continued demand for more and more computing power.
Concerns about scaling laws started recently with reports that OpenAI's progress in improving its models was slowing. But Jensen Huang isn't worried.
The Nvidia CEO got the question Wednesday, on the company's third-quarter earnings call. Has progress stalled? And could the power of Nvidia's Blackwell chips start it up again?
"Foundation model pre-training scaling is intact and it's continuing," Huang said.
He added that scaling isn't as narrow as many think.
In the past, it may have been true that models only improved with more data and more pre-training. Now, AI can generate synthetic data and check its own answer to —in a way— train itself. But, we're running out of data that hasn't already been ingested by these models, and the impact of synthetic data for pre-training is debatable.
As the AI ecosystem matures, tools for improving models are gaining importance. The first generation of post-training improvement for models came from armies of humans checking AI's responses one by one.
Huang shouted out OpenAI's Strawberry or o1 model, which uses more modern strategies like "chain of thought reasoning" and "multi-path planning." These are both tactics that encourage the models to think longer and in a more step-by-step fashion so that the responses are more considered.
"The longer it thinks, the better and higher quality answer it produces," Huang said.
Pre-training, post-training improvements, and new reasoning strategies all improve models, Huang said. Of course, if the model is doing more computing to answer the same fundamental question, that's where higher-powered compute is necessary — especially since users want their responses just as fast, if not faster.
The demand for Blackwell is the result, he said.
After all, the first generation of foundation models took about 100,000 Hopper chips to build. "You know, the next generation starts at 100,000 Blackwells," Huang said. The company said commercial shipments of Blackwell chips are just beginning.
