Amazon Takes On Nvidia: Now Selling Custom AI Chips to Everyone

Amazon's move is less dramatic than it sounds. The company has been making custom AI chips for years, mostly for itself — to power its own cloud services on AWS. But if Amazon can sell them to competitors too, two things happen: first, tech companies stop being trapped by Nvidia's prices, second, Amazon makes serious money on something it already builds.

Nvidia won by sheer market logic until now. Everyone developing AI wants Nvidia chips because, well, they work incredibly well and everyone uses them — it's a vicious circle that only enriches Nvidia. The prices? Let's just say they're not gentle: an H100 costs thousands of dollars, and companies buy them like candy because they have no choice.

Amazon's custom chips (called Trainium for training and Inferentia for inference) are natively built for AWS services. Translation: if you buy Amazon's chips and use AWS, it's a perfect match. But now the company wants to go further: make them attractive to people who don't use AWS, or who do but want to diversify their suppliers.

This doesn't mean Nvidia is going out of business tomorrow. Their chips are still the gold standard, and plenty of companies won't switch suppliers just to save a few million dollars. But it introduces a real alternative in a market that was becoming uncomfortably monopolistic — even governments are starting to worry: what if Nvidia says "no" to someone for geopolitical reasons?

The twist? Amazon is doing exactly what it did with cloud computing: you walk in as an outsider, offer a cheaper alternative (not necessarily better, but it works), and in ten years you own a massive slice of the market. Nvidia might discover that its most dangerous competitor isn't someone using their chips — it's someone who decided to build their own.

For tech companies, the message is simple: soon they'll have real choices. And real choices drive prices down. It's not revolutionary, it's just economics.