As Big Tech Designs Its Own AI Chips, the Companies Behind the Scenes Win
Key PointsBig tech companies, including Alphabet, are increasingly turning to custom processors to give them an edge in AI processing.
Custom AI processors are gaining traction as big tech firms increasingly design their own chips to power AI services. Broadcom, Marvell Technology, and Taiwan Semiconductor Manufacturing (TSM) are among the biggest winners in this space. Alphabet relies heavily on its custom Tensor Processing Units (TPUs), while Amazon and Microsoft utilize Marvell's custom AI processors, Trainium and Maia.
TSM, a leading processor manufacturer, benefits from manufacturing most of the world's processors and about 90% of the most advanced ones. The custom processor market is projected to grow by an estimated 45% this year, outpacing GPUs' 16% growth. Intel, despite recent investments, is expected to experience a comparatively slower growth rate.
Among the three custom chip designers, Broadcom appears most promising due to faster sales and earnings growth, as well as a lower forward price-to-earnings ratio.
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