Microsoft Corp. and Advanced Micro Devices Inc. (AMD) are reportedly collaborating on a new artificial intelligence (AI) processor, code-named Athena. The partnership aims to offer an alternative to Nvidia Corp., which currently dominates the market for AI-capable chips called graphics processing units (GPUs).

According to sources familiar with the matter, Microsoft is providing financial support and engineering resources to bolster AMD’s efforts to expand into AI processors. Several hundred employees from Microsoft’s silicon division are said to be working on the Athena project. The partnership is expected to help both companies expand their reach in the thriving AI chip market.

Currently, Microsoft does not have its own specialized AI chip, unlike its top competitors in the cloud infrastructure market, Amazon and Alphabet. The need for silicon capable of handling AI has become critical in recent months, particularly for Microsoft, which provides computing resources for OpenAI’s popular chatbot, ChatGPT.

ChatGPT requires thousands of Nvidia GPUs to operate, and Microsoft is also developing its own applications that rely on the GPT-4 large language model, which is at the heart of ChatGPT. Large language models are a type of generative AI technology that can create text and other content in response to human input. Microsoft’s Bing chatbot already incorporates the GPT-4 model, and the company has announced plans for security and productivity programs that will use it as well.

The collaboration with AMD on Athena is the latest in a series of partnerships and deals that have put the chipmaker at the forefront of the semiconductor industry in recent years. AMD is already a key supplier to Microsoft, as well as to other cloud providers such as Google and Oracle.

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As the demand for AI technology continues to grow, the development of specialized chips like Athena is likely to become increasingly important. With the partnership between AMD and Microsoft, the two companies are positioning themselves to be at the forefront of this exciting and rapidly evolving field.

The news of the collaboration has already had an impact on the stock market, with shares of rival chipmaker Nvidia falling following the report’s publication. The partnership between Microsoft and AMD highlights the growing demand for AI-capable chips, as AI continues to revolutionize industries and reshape the global economy.

Collaborations like this one are crucial for the development of more efficient, powerful, and accessible AI chips. These partnerships ensure that the AI landscape remains competitive and diverse, ultimately fostering the growth of the technology and its applications across various sectors.

This news was reported by Bloomberg on May 4th, 2023, citing sources familiar with the matter.

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