Microsoft Rebuts Allegations Of AI Chip Collaboration With AMD, Should NVIDIA Worry?

Processor with a Microsoft Windows logo in the middle.
Microsoft has either teamed up with AMD to design custom processors for artificial intelligence tasks, or it has not. Yeah, we're not exactly going out on a limb there. But there are conflicting reports and the situation brings up an interesting question—should NVIDIA be at all nervous about a potential collaboration between Microsoft, a juggernaut in the software space, and its rival AMD?

So here's the deal. Citing people who are supposedly knowledgeable about the situation, Bloomberg reports that Microsoft and AMD have joined forces to develop semiconductors with AI capabilities to compete with NVIDIA's ever-expanding product line. The sources wish to remain anonymous because this isn't public information, but according to them, Microsoft is providing engineering and other resources to AMD to design the semi-secretive chip.

As the story goes, this would ultimately be a Microsoft product codenamed Athena. Microsoft already dabbles in hardware with its Surface products and various other gear, but this would be a big expansion into new territory. It's not completely out of left field, either—Microsoft recently expanded its efforts into semiconductors with the acquisition of Fungible, a data processing unit (DPU) startup founded in 2016 by a former Apple software engineer.

It's an intriguing move, though Microsoft denies that AMD has anything to do with Athena.

"AMD is a great partner. However, they are not involved in Athena," Microsoft spokesman Frank Shaw said in a statement.

Even if true, it's entirely possible that Microsoft and AMD are collaborating on AI chips that are not under the Athena umbrella. Note that Shaw didn't outright deny an AI allegiance, only that AMD is not involved in that particular project.

AMD, meanwhile, is mum on the subject. That said, it makes sense that AMD would want to bolster its footprint in AI. The rise of chatbots like ChatGPT and Google Bard has put AI in the mainstream spotlight and those public betas are really just the tip of a very big and lucrative iceberg. NVIDIA certainly recognizes this to be true.

"AI is at an inflection point, setting up for broad adoption reaching into every industry," NVIDIA founder and CEO Jensen Huang said while delivering the company's most recent financial results. "From startups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI."

NVIDIA's quarterly revenue trend (chart).
Source: NVIDIA

Whereas gaming was once NVIDIA's top earner, it's now a distant second behind its data center solutions, which collectively raked in twice the amount of revenue last quarter ($3.6 billion versus $1.8 billion). NVIDIA's data center dollars are not completely derived from AI solutions, but AI capabilities play a key role.

"NVIDIA is partnering with leading cloud service providers to offer AI-as-a-Service that provides enterprises access to NVIDIA’s world-leading AI platform. Customers will be able to engage each layer of NVIDIA AI—the AI supercomputer, acceleration libraries software or pretrained generative AI models—as a cloud service," NVIDIA recently said.

AMD CEO Dr. Lisa Su offered up similar sentiments just last week during an earnings call to discuss the company's own financial results. Dr. Su noted that "we are in the very early stages of the AI computing era" and said the "rate of adoption and growth is faster than any other technology in recent history." She also talked about the recent interest in generative AI.

"We are very excited about our opportunity in AI. This is our number one strategic priority, and we are engaging deeply across our customer set to bring joint solutions to the market," Dr. Su said.

Even if AMD is not involved with Athena, it's clear the company intends to make a major push into AI. Whether this should worry NVIDIA, we'll let you be the judge—sound off in the comments section below!