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Amazon's cloud unit launches new chips to take on Intel, Nvidia

© Reuters. FILE PHOTO: The logo for Amazon Web Services (AWS) is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren

By Stephen Nellis

(Reuters) – Inc (NASDAQ:)’s cloud computing unit on Tuesday introduced two new custom computing chips aimed at helping its customers beat the cost of using chips from Intel Corp (NASDAQ:) and Nvidia Corp.

With $45.37 billion in sales in 2020, Amazon Web Services (AWS) is the world’s biggest cloud computing provider and one of the biggest buyers of data center chips, whose computing power AWS rents out to its customers. Ever since buying a startup called Annapurna Labs in 2015, AWS has worked to develop its own custom chips.

On Tuesday, the company released the third generation of its Graviton chip that is designed to compete with central processors from Intel and Advanced Micro Devices (NASDAQ:). The Graviton3 is 25% faster than its predecessor, and Dave Brown, vice president of Elastic Compute Cloud at Amazon, told Reuters that the company expects it to provide a better performance per dollar than Intel’s chips.

AWS also said that a new class of chip called Trainium, which is designed to train machine learning computer models and will compete against chips from Nvidia, will soon be available to its customers. AWS expects it to train machine learning models for a cost that is 40% lower than Nvidia’s flagship chip.

AWS still works closely with Intel, AMD and Nvidia – for example, it is working with Nvidia to pair its Graviton processors to providing a way for the Android game developer to stream its titles to devices. Brown said AWS wants to keep the computing market competitive by offering an additional chip choice.

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“We have thrown down the gauntlet on performance. And I believe that in the years to come, you’ll see better performance from all of them – Intel, AMD – on price-performance specifically,” Brown said. “That’s the thing they have got to keep our customers happy on.”

Raj Bala, a vice president and analyst at research firm Gartner, said the chip companies should take competition from AWS seriously over the long term.

For now, many cloud computing customers will want to use Intel and Nvidia chips because decades of software have been written to run on them. Only early adopters who can handle the complexity of re-writing their own software are likely to try the new AWS chips, Bala said.

But the same was true when AWS launched a decade and half ago and was used by smaller tech-savvy customers. The company eventually expanded to mainstream companies and is now on pace to become as large as traditional firms like Cisco Systems Inc (NASDAQ:).

“It is a broadside against Intel,” Bala said. “There’s no two ways about it.”

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