Amazon hopes to challenge Nvidia more directly by selling its AI chips

Amazon Web Services is quietly floating the idea of becoming a chip vendor, not just a chip user. AWS AI chief Peter DeSantis told Bloomberg the company is in early talks to sell its Trainium chips to outside firms for their own data centers, though he wouldn't name names. The company confirmed to TechCrunch that these conversations are still in their infancy.

The spark for this came from CEO Andy Jassy's April shareholder letter, where he did some napkin math: if Amazon treated its chip operation as a standalone business and sold this year's production the way Nvidia or AMD do, it would be running at roughly $50 billion a year. Jassy said demand for the chips has been so intense that selling racks of them to outside buyers isn't out of the question.

Fifty billion dollars sounds massive until you put it next to Nvidia, which is currently pulling in revenue at a $326 billion annual clip. That gap is enormous. Still, $50 billion is roughly Intel's entire yearly revenue, so this isn't some side hustle — it's a real business if Amazon pulls it off.

There's a catch, and it's a big one. AWS makes far more money from Trainium chips staying inside its own cloud than it would from selling them outright. Every chip running in an AWS data center generates fees not just for compute, but for storage, networking, security and monitoring wrapped around it. Sell the silicon directly and you lose that whole bundle. On top of that, AWS has said its current Trainium capacity sold out almost instantly, and so did early capacity for the next-gen Trainium4, which is still more than a year from shipping — and that was before OpenAI joined AWS's roster of served models.

So any real move into chip sales would mean Amazon either builds a surplus through partners like TSMC or makes existing AWS customers wait longer. And TSMC isn't exactly starving for business — it recently made Nvidia its biggest customer, edging out Apple. Meanwhile Jensen Huang has been eyeing a $200 billion CPU market of his own, pushing into Intel and AMD's turf. Jassy's $50 billion chip ambition is smaller, but it's aimed squarely at Nvidia's backyard, not a neighboring lot.