Google has confirmed its partnership with OpenAI at its second-quarter earnings call. OpenAI's ChatGPT and API services will adopt Google's cloud platform, with Google data centers in the US, Japan, the Netherlands, Norway, the UK, and other locations supporting OpenAI's services.
Although OpenAI previously stated clearly that it would not directly use Google's ASIC chips, in practice, its collaboration with Google Cloud inevitably involves utilizing the ASIC computing power Google provides.
This partnership not only helps boost Google Cloud revenue but also addresses the surging demand for computing power and further stimulates the need for in-house chip development. Google has already taken on significant AI model training and inference work from non-cloud tech giants. Apple, a company relatively lagging in AI development, has yet to establish its own AI data centers or develop its own cloud ASICs, thereby having plenty of future growth potential.
Cloud service providers (CSPs) that build their own data centers and develop in-house chips face considerable cost pressure, particularly smaller-scale providers who lack the same operational scale. Under these circumstances, the cloud business of major CSPs alone already demands a sizable volume of ASICs for support. This is precisely why Google is the top target for all ASIC and IP vendors that hope to break into its supply chain.
Among CSPs, Google has the largest production volume for ASIC products, followed by AWS. Google's cloud AI services are more extensive than AWS', and it is likely to widen the gap with other CSPs. ASIC projects commissioned by individual customers are difficult to match Google's product line scale, continuity, and development stability.
Working with Google comes with rigorous expectations. Google began developing TPU products and technology well before the current wave of cloud ASIC demand, and its internal chip team is fully structured and highly familiar with the details of chip design and implementation. In Google's assessments, there is virtually no room for ambiguity in evaluating a vendor's technical capabilities. Its long-standing chip development efforts have cultivated a set of trusted long-term suppliers. Broadcom is currently the primary supplier, while MediaTek has followed closely and earned Google's trust over time.
ASIC vendors note that MediaTek's journey from only supplying SerDes to securing major design wins demonstrates that starting with a single IP technology to enter the supply chains of major CSPs like Google can be a viable long-term strategy. Once established, vendors can gradually expand their influence. However, many vendors still believe that, in this relatively chaotic ASIC market, it is more important to first secure a stable revenue source.
Despite the abundance of cloud ASIC projects, only a few have entered mass production. For most ASIC vendors, orders outside the major CSPs still require time before making worthwhile contributions to revenue.
Article edited by Jack Wu
