In the rapidly advancing field of Artificial Intelligence (AI), AI chips serve as the core hardware driving technological progress, with market demand growing swiftly. Global chip manufacturers Nvidia, Intel, and AMD are engaged in fierce competition to seize the leadership position in the AI chip market.
Nvidia dominates the AI chip market with an absolute advantage in the data center GPU sector, holding a staggering 98% market share. However, AMD and Intel have not ceased their pursuit, gradually expanding their market share by launching new AI chip products.
AMD’s progress in the AI chip market is particularly notable. According to forecasts by Wells Fargo, AMD’s AI chip revenue was $461 million in 2023 and is expected to grow to $2.1 billion by 2024, with a market share projected to reach 4.2%. AMD’s Instinct MI300 series of GPUs has performed well in the market, securing purchase orders from Microsoft, Meta, and Oracle. AMD CEO Lisa Su stated in an earnings call that the MI300 series exceeded $1 billion in sales in less than two quarters and predicted that data center GPU revenue for 2024 would exceed $4.5 billion, higher than the previously estimated $3.5 billion.
Meanwhile, Intel is actively positioning itself in the AI chip market. Intel’s latest Gaudi AI chip, the Gaudi 3, outperforms Nvidia’s H100 in performance and energy efficiency but is priced at only half of the H100, offering an enticing option for companies unwilling to spend over $30,000 per H100 card. Additionally, Intel is developing the next-generation data center GPU, code-named “Falcon Shores,” aimed at AI and HPC, scheduled for release in 2025.
Despite potential delays in Nvidia’s Blackwell chip, its strong position in the AI chip market remains unshakable in the short term. Nvidia’s data center and AI business continues to grow robustly, with Q4 of the fiscal year 2024 achieving revenue of $22.1 billion, a 265% increase year-over-year, and a gross margin of 76%, setting a historical record. Nvidia’s AI chip demand is strong, with Q1 of 2025 revenue expected to reach $24 billion, a 234% increase year-over-year.
Nvidia: The Dominant Force in the AI Chip Market
Nvidia occupies a dominant position in the AI chip market with its data center GPUs, with a market share as high as 98% according to market research. Nvidia’s data center GPU shipments reached an astonishing 3.76 million units in 2023, nearly the entire market output. The strong demand for Nvidia’s Hopper GPU platform and InfiniBand solutions has significantly driven the growth of the data center business. Moreover, despite potential delay issues with the Blackwell series of AI chips, its market position remains solid, with the expected procurement share to exceed 70% by 2025.
Although Nvidia’s stock price has fluctuated recently, many Wall Street analysts believe this will not significantly impact its revenue or demand. Nvidia’s data center business achieved revenue of $18.4 billion in Q4 of the fiscal year 2024, a 409% increase year-over-year, demonstrating its strong momentum in the AI chip market.
AMD: The Strong Contender in the Race
As a major competitor to Nvidia, AMD is rapidly expanding its market share with its Instinct MI300 series of GPUs. AMD’s AI chip revenue was only $461 million in 2023 but is expected to grow to $2.1 billion by 2024, with a market share projected to reach 4.2%.
AMD’s Instinct MI300X data center AI GPU has attracted widespread attention since its launch. With its excellent performance and memory capacity, it quickly became the main driving force behind the revenue growth of AMD’s data center division. In Q2 of 2024, AMD’s data center division’s revenue doubled year-over-year, with AI chip sales exceeding $1 billion. This achievement not only exceeded market expectations but also demonstrated AMD’s competitiveness in the AI chip field.
AMD CEO Lisa Su is confident in the company’s AI chip business, stating that the MI300 series exceeded $1 billion in revenue this quarter and predicting that data center GPU revenue will exceed $4.5 billion in 2024. Additionally, AMD expects the supply shortage of MI300X to last until 2025, reflecting the strong market demand for AMD AI chips.
In terms of product layout, AMD not only has the Instinct MI300X but also plans to launch the Instinct MI325X to further consolidate its competitiveness in the AI chip market. The MI325X is expected to be on the market in Q4 of 2024, with performance expected to surpass Nvidia’s H200 GPU, increasing computing speed by 30% and memory bandwidth to twice that of the H200. The launch of this new product will provide AMD with more leverage in competition with Nvidia.
Although Nvidia holds more than 80% of the AI processor market and more than 90% of the data center GPU market, AMD’s growth and new product launches show that it is becoming a formidable competitor to Nvidia. AMD’s AI chips not only match Nvidia’s products in performance but also show their advantages in pricing and supply chain management.
AMD’s strategic layout is not limited to product development but also includes cooperation with tech giants. Major customers of Nvidia, such as Microsoft, Amazon AWS, and Oracle, are purchasing AMD’s MI300 chips to reduce their over-reliance on Nvidia. These partnerships not only provide AMD with a stable source of revenue but also enhance its brand influence in the AI chip market.
However, AMD’s rapid development in the AI chip market also faces challenges. Nvidia’s strategy of bundling software and hardware, especially its Cuda programming software ecosystem, sets a high entry barrier for competitors. In addition, the US Department of Justice’s antitrust investigation into Nvidia also reflects market concerns about monopolistic practices in the AI chip market. AMD needs to comply with market rules while consolidating and expanding its market share through technological innovation and strategic cooperation.
Looking ahead, the AI chip market will continue to grow rapidly. As AI technology is deeply applied in various industries, the demand for high-performance AI chips will continue to increase. With its innovative capabilities and market strategies in the AI chip field, AMD is expected to occupy a more important position in the AI chip market in the next few years. At the same time, AMD also needs to pay attention to market changes and respond to potential challenges to ensure its leading position in the fierce market competition.
Intel: The Steady Old Giant Moving Forward
Although Intel holds a relatively small share in the AI chip market, its Gaudi AI chip shows strong competitiveness. The Gaudi 3 chip outperforms Nvidia’s H100 in performance and energy efficiency and is priced at only half of the H100, offering an attractive option for companies that do not want to spend over $30,000 per H100 card. In addition, Intel is developing the next-generation data center GPU, code-named “Falcon Shores,” aimed at AI and HPC, scheduled for release in 2025.
Intel’s strategy is to gradually expand its share in the AI chip market through technological innovation and product upgrades. Despite fierce competition with Nvidia, Intel still holds a place in the AI chip field with its profound technological accumulation and market influence.
Market Competition and Future Prospects
Currently, the competition in the AI chip market is mainly concentrated among Nvidia, AMD, and Intel. Nvidia maintains a leading position with its strong market presence and technological innovation capabilities, while AMD and Intel are working hard to narrow the gap with continuous product innovation and market strategies.
With the continuous advancement and expansion of application fields of AI technology, the demand for high-performance AI chips will continue to grow. It is expected that by 2027, the global AI chip market size will reach 119.4 billion US dollars. Although Nvidia is far ahead in the AI chip market, AMD and Intel are gradually expanding their market share through continuous technological innovation and product upgrades. As AI technology develops rapidly and its applications become more widespread, the competition among these three chip manufacturers will become more intense, and the market pattern will continue to evolve.
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