Amazon eyes direct chip sales to challenge Nvidia dominance

AWS AI chief Peter DeSantis confirmed the company is engaged in early-stage talks regarding the external sale of its hardware. This pivot follows CEO Andy Jassy’s April shareholder letter, where he estimated that if the chip division operated as a standalone entity, its annual run rate would reach approximately $50 billion. While this figure pales in comparison to Nvidia’s current $326 billion revenue pace, it represents a scale equivalent to Intel’s total annual intake.

Historically, Amazon reserved its chips for internal cloud infrastructure, profiting from the downstream services—storage, security, and networking—that accompany AI token processing. Expanding into direct sales creates a logistical bottleneck: demand for the current Trainium line and the upcoming Trainium4 already exceeds production capacity. To succeed, Amazon would need to secure a significant manufacturing surplus from TSMC, a foundry where Nvidia currently holds priority status as the largest client. Despite these supply chain hurdles, the company’s leadership is signaling a departure from its closed-loop model to compete for market share in the rapidly expanding AI hardware landscape.