Amazon weighs selling Trainium chips to challenge Nvidia

Amazon is in early talks to sell its Trainium AI chips to outside data centers, a change from using them only inside AWS. CEO Andy Jassy has said the chip line could run at roughly $50 billion a year if it stood on its own, which would put it close to Intel's annual revenue. The pitch to customers is a real alternative to Nvidia, whose hardware sets the price and the waiting list for almost everyone training large models.

The hard part is supply. Trainium already sells out faster than Amazon can build it, and Nvidia is the largest customer at TSMC, the foundry both depend on, so manufacturing capacity is the binding constraint rather than demand. Selling to outside buyers also forces a choice Amazon has not had to make before: every chip shipped to a competitor is one its own cloud customers do not get. Until now Amazon profited from these chips indirectly, through the storage, networking, and security wrapped around them, so direct sales would be a different kind of business with thinner room for error. The next generation, Trainium4, is still more than a year away.

Why it matters

If you buy AI compute, a credible second source to Nvidia could ease both price and waiting times, but only if Amazon can make enough chips to serve outsiders without starving its own cloud. The thing to watch is whether these talks turn into signed external contracts or stay an earnings-call ambition.