By In a strategic move signaling Meta Platforms’ commitment to advancing artificial intelligence (AI), the company has appointed Hock Tan, the CEO of chip maker Broadcom, to its board of directors. The addition of Tan is part of Meta’s ongoing efforts to develop an artificial general intelligence (AGI) that surpasses human capabilities in various fields.
While Meta’s collaboration with Broadcom is not new, the latest appointment underscores the growing trend among tech giants to prioritize in-house chip capabilities. Through this, companies aim to accelerate their AI initiatives and reduce reliance on external suppliers like Nvidia. In fact, Meta’s regulatory filing revealed that it had already spent around $500 million on Broadcom’s services in 2023.
Meta is further poised to launch a new iteration of its custom chips, called ‘Artemis,’ this year, as it continues to pursue technological innovation. Nonetheless, the company also plans to integrate 350,000 Nvidia H100 graphics processing units by the end of the year, showcasing its commitment to leveraging both in-house solutions and strategic partnerships.
This development has resonated positively with investors, as Meta shares rose by 0.7% in premarket trading, complemented by a 1.3% increase in Broadcom’s stocks. It seems that the race to establish AI supremacy is not only about software capabilities but also about having the hardware prowess necessary for effective implementation.
The Growing Importance of Tech Companies Making Their Own Chips
Tech companies have been increasingly interested in developing their own chips, and this trend was on full display as Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chip maker, hit a record high in local trading.
Following the Lunar New Year holiday break, TSMC saw a significant surge in trading, with a 7.9% increase in stock value. This rise can be attributed to their impressive January revenue growth of 7.9% from the previous year, driven by the soaring demand for AI chips.
In the midst of this chip frenzy, there is also a noticeable uptick in merger-and-acquisitions activities. Renesas Electronics, a Japanese chip maker, recently announced its plan to acquire Australian design-software provider Altium for a staggering $5.91 billion. This move highlights Japan’s determination to reclaim its position as a major player in the chip making sector.
However, it is important to approach this rapid expansion with caution. The chip industry is only just recovering from a recent supply glut. By rushing blindly into the next phase of investment, there is a risk of setting up the industry for potential downfall in the future.
As tech companies continue to prioritize chip development, the landscape of the industry is sure to experience significant shifts. It remains to be seen how these companies will navigate the challenges and opportunities that lie ahead.
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