Meta Partners with Amazon for AI Technology Enhancement
Meta (formerly Facebook) has signed a long-term agreement with Amazon to utilise Amazon’s Graviton chips in bolstering its artificial intelligence (AI) capabilities. Notably, the Graviton chips are central processing units (CPUs), diverging from the usual reliance on graphics processing units (GPUs) for AI applications.
While GPUs have historically been favoured for AI training and operations, a shift is occurring as CPUs are regaining traction in data centres. This resurgence is largely attributed to the increasing use of AI agents—autonomous bots designed to perform tasks such as data retrieval from emails and web searches, which operate more efficiently on CPUs.
This trend has sparked renewed sales in CPU markets, reversing a decline seen during the initial phases of the AI boom.
Meta will deploy Amazon processors to enhance its AI services. (Source: Reuters)
Market Dynamics and Competitors
On Thursday, Intel released its earnings report, exceeding expectations for the first quarter and providing a positive outlook for Q2, driven by robust demand for its data centre processors. Meanwhile, Nvidia is also making headway into the CPU sector; in February, it announced the deployment of its Grace CPU servers as part of a partnership with Meta, with plans to introduce additional CPU servers in 2027. Additionally, AMD has entered a similar agreement with Meta.
Amazon CEO Andy Jassy revealed in his recent shareholder newsletter that two major customers of Amazon Web Services (AWS) had expressed interest in acquiring all of Amazon’s CPU capacity for 2026, a request Jassy had to decline to maintain service to other clients.
Beyond the Graviton line, Amazon provides Trainium chips, which are crafted for AI training and processing. The tech giant has already secured contracts to provide these chips to prominent AI companies such as OpenAI and Anthropic.
According to Jassy, Amazon’s semiconductor business is on pace for an annual revenue run rate of approximately $20 billion, growing at a remarkable triple-digit percentage yearly. However, he emphasised that this figure could be misleading since it only accounts for revenue generated through AWS’s EC2 service. If considered independently, Amazon’s chip revenue could reach an estimated $50 billion.
“There’s significant demand for our chips; it’s likely we’ll begin to offer them to third parties in the future,” noted Jassy, indicating a potential expansion strategy.
In summary, Meta’s agreement with Amazon marks a strategic move as both companies navigate the evolving landscape of AI technology, alongside competing firms like Nvidia and AMD. With a rising interest in CPU-based AI solutions, the semiconductor market is expected to undergo substantial growth in the coming years.
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