Amazon's Powerful AWS Custom Chip To Get An Upgrade - Why Is It Important?

Amazon.com, Inc AMZN Amazon Web Services could soon announce an update to its Graviton4 chip, sparking a rivalry with Intel Corp INTC and Advanced Micro Devices AMD.

The chip could include 600 gigabits per second of network bandwidth, CNBC reported on Wednesday. Benzinga has reached out to Amazon for its comment.

Hyperscalars like Amazon, Microsoft Corp MSFT, Alphabet Inc GOOGL, and Meta Platforms META migrated towards custom chips to curtail costs, tackle compatibility issues, and address supply crises.

Also Read: Amazon Expands Global Data Centers, Boosts Access To Nvidia AI Chips For Cloud Customers

What is the Graviton4 Chip?

According to Amazon, its latest cloud computing chip, Graviton4, offers significant advancements in performance and energy efficiency. It’s the fourth generation of AWS’s custom-engineered data center chips, first introduced in 2018.

Graviton4, based on Arm-architecture, boasts four times the performance of Graviton1 and is even more energy-efficient than its predecessor, Graviton3. With 73 billion transistors, it’s being adopted by major customers like SAP and Epic Games for high-performance and reliable cloud experiences. This innovation, alongside other custom AWS chips like Trainium and Inferentia for AI, underscores Amazon’s leadership in cloud computing technology.

Amazon manufactures Graviton4 central processing unit at its Annapurna Labs in Austin, Texas.

Why Does Having A Custom Chip Matter?

Rami Sinno, director of engineering at Amazon Web Services (AWS) Annapurna Labs, cited strong demand for chips that outpaced the supply.

AWS Senior Director Gadi Hutt told CNBC about Amazon’s initiatives to provide an alternative to Nvidia Corp’s NVDA costly graphics processing units.

Hutt told CNBC. that Anthropic’s Claude Opus 4 AI model launched on Trainium2 GPUs and Project Rainier. Trainium3 is coming up in 2025, he said.

AWS has committed $8 billion to Anthropic. Also, Amazon chief Andy Jassy recently highlighted the company’s extensive leveraging of Generative AI to drive value.

Jassy highlighted Generative AI’s crucial role within AWS for developers and optimizing internal functions such as fulfillment and customer service. He also pointed to developing AI agents to automate tasks and accelerate innovation.

As Amazon commits huge spending and Capex to AI, it is imperative that it design its own chips based on custom needs rather than relying on NVIDIA.

Jassy stated that this AI-driven transformation might reduce the corporate workforce in the coming years.

Price Action: AMZN stock is up 0.92% at $216.80 at the last check on Wednesday.

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