AI is dangerously concentrated.
While we see new and improved models from startups and in the open-source space, only a handful of players provide the engines that drive much of the AI we use on the front end.
In the cloud market, just three companies control most of the artificial intelligence hardware—as discussed in depth in our PTP Report focused on the cloud market’s concentration. In that space, we see regulatory pressures working to end practices like egress fees, though the heavy demands for new, powerful data centers make it unlikely that competitors will break through in a significant way anytime soon.
Even with big tech monopolies in the national spotlight—final arguments are being made in the US vs Google now, and American regulators suing Apple, Amazon, and Meta over monopolistic practices—AI’s concentration continues to grow.
Still, of all of these, no aspect of AI, and maybe tech as a whole, is as narrowly controlled as AI hardware, and in particular, chips.
With over 70% of the market share, Nvidia— whose chips (and software CUDA) are involved in most everything AI, from self-driving cars to social media—relies on TSMC, the Taiwan semiconductor maker, for most of their manufacturing. And with AI solutions today built specific to the chips that run them, it’s almost impossible for developers to swap between alternatives.
2024’s seen little change in these AI chip market trends: despite having their worst day on Wall Street in four years, Nvidia roared right back at the end of April, adding another $290 billion in value in the company’s best week since May, 2023.
Nvidia, by all accounts, makes a great product, and has skillfully cornered their market, but in this week’s The PTP Report, we look at what this means for the industry, and the efforts of Meta, Google, AMD, Intel, Microsoft, Amazon, and others to open the door for alternatives, desperate to inject more competition into the field.