Everyone hates ASIC, but hyperscalers want them

By Junko Yoshida for OJO & YOSHIDA REPORT, in collaboration with Yole Intelligence, part of Yole Group Hyperscalers want customized chips for their data centers. But that’s a tricky proposition for chip vendors looking for volume market opportunities.

What’s at stake:

Processors that go inside data centers are getting rearchitected, customized and diversified. When hyperscalers develop their own chips, how should chip companies previously serving them respond? Is customization the way to go?

A growing trend for diversification and customization among data-center chips has been driven by hyperscalers — notably Amazon, Google and Meta — who are rolling their own silicon.

Their attempt at an end run around traditional chip designers has sent shivers through the semiconductor industry.

The concerns are justified.

Cracking the hyperscalers’ data-center processor market has posed challenges for traditional semiconductor companies and startups. This is partly because hyperscalers demand specific hardware solutions attuned to their algorithms and workloads. Hyperscalers with proprietary software also have an unfair advantage. When they say jump, chip companies must be ready to say how high.

Rearchitecting data centers

But first, let’s break down the current status of the data-center processor market.

Today, two main types of processors are going into data centers, according to Adrien Sanchez, technology & market analyst, computing, at Yole Intelligence. “One is CPU and another is Accelerator.”

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