Microsoft is accelerating the in-house production of semiconductors for its data centers, aiming to reduce its dependence on external suppliers like Nvidia and AMD. Kevin Scott, the tech giant’s Chief Technology Officer , said this on Wednesday, emphasizing that the long-term strategy calls for the predominant adoption of chips developed in-house.
Data centers, the heart of the processing required for developing applications and artificial intelligence models, currently rely largely on GPUs from Nvidia, the undisputed leader in the industry, and to a lesser extent on AMD. However, Microsoft, like other cloud computing players, including Google and Amazon, is investing in the development of proprietary chips to make systems more efficient and tailored to their needs.
In 2023, Microsoft unveiled the Azure Maia AI accelerator, designed specifically for AI workloads, and the Cobalt CPU. The company is also working on next-generation semiconductors and recently introduced a microfluidics-based cooling technology , developed to mitigate the problem of chip overheating.
When asked if the goal was to gradually replace Nvidia and AMD processors in their data centers, Scott responded affirmatively , explaining that many Microsoft chips are already in use. According to the CTO, the approach isn’t limited to semiconductor production, but encompasses the entire system, including crucial aspects like networking and cooling, with the aim of maximizing workloads.
This strategy comes amid intense competition among tech giants. Companies like Microsoft, Amazon, Alphabet, and Meta have announced over $300 billion in capital investments in 2024, much of which will be allocated to artificial intelligence. Despite these efforts, Scott emphasized that computing power remains insufficient: “To call it a crisis in the IT sector is perhaps an understatement,” he said, noting that since the advent of ChatGPT, the demand for capacity has grown faster than it can be implemented.
Microsoft has already significantly expanded its data center infrastructure, but even the most optimistic internal forecasts are often inadequate to meet demand. “We’ve added tremendous capacity over the past year and will continue to do so in the years to come,” Scott added.
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