Amazon.com, Inc. (AMZN.US) develops its own chips, leading to a major breakthrough.

CEO Andy Jassy of Amazon.com, Inc. (AMZN.US) has sent a letter to shareholders regarding the company's custom chip business, expressing strong optimism towards the company's internal infrastructure stack. Undoubtedly, large-scale data center operators are currently facing a crisis of "computing resource shortage," as existing infrastructure is unable to meet the huge demand brought by artificial intelligence and related services. We see giants like Amazon.com, Inc., Alphabet Inc. Class C, and Meta turning to custom chips to make up for the lack of computing power. Among them, Amazon.com, Inc.'s Trainium chip and Graviton server CPU have proven to be mature and reliable products, which is why CEO Andy Jassy is confident in them. Jassy stated in communication with shareholders that Amazon.com, Inc.'s custom chip business is rapidly expanding, with an expected annual recurring revenue (ARR) of $50 billion, a figure far surpassing the levels of AMD and Intel Corporation. The Amazon.com, Inc. CEO stated that having our independently developed, market-favored AI chips will open up many possibilities, the most important of which may be lowering customer costs and bringing better economic benefits to AWS. We expect that after the scale-up of Trainium chips, we will save billions of dollars in capital expenditures annually, and compared to relying on other chips for inference, we will bring hundreds of basis points in operational profit rate advantages. The $50 billion annual recurring revenue (ARR) figure is an estimated value of the scale of Amazon.com, Inc.'s custom chip business after it is split into an independent entity and becomes a computing service provider like NVIDIA Corporation. The growth of Trainium and Graviton mainly comes from AWS's cloud services, and Amazon.com, Inc. has not yet provided its custom chips to users in need of computing services. Jassy stated that the economic benefits brought by AWS and its ASIC chip solutions are superior to those of NVIDIA Corporation. While he reiterated his support for NVIDIA Corporation, he also pointed out that what customers need is a choice that dominates in terms of "value for money," which he believes Trainium does better in. Amazon.com, Inc. CEO also made a veiled reference to Intel Corporation and its CPU market share, stating that after the release of the Graviton chip based on ARM architecture, AWS's infrastructure is now almost entirely dominated by them. Jassy stated that Trainium's training and inference are also facing a similar situation. His words contain an interesting argument, which industry experts may not have realized yet. The idea of custom infrastructure is not to replace mainstream computing solutions (such as NVIDIA's products), but to fill the huge computing gap, so that large-scale data centers like Amazon.com, Inc. cannot rely solely on GPU manufacturers. Interestingly, Amazon.com, Inc. has hinted at the possibility of selling its racks to third-party customers, which means it is likely to directly compete with companies like NVIDIA Corporation. The company plans to invest "billions of dollars" in capital expenditure in this business, so the future development direction of Trainium + Graviton technology stack is worth paying attention to.