[sounds]

Nvidia is interested in commoditizing their complements. It's a business strategy to decrease the power of OpenAI (for instance).

Nvidia dreams of a world where there are lots of "open" alternatives to OpenAI, like there are lots of open game engines and lots open software in general. All buying closed Nvidia chips.

[amelius]

But AI depends on a small number of tensor operators, primitives which can be relatively easily implemented by competitors, so compute is very close to being a commodity when it comes to AI.

A company like Cerebras (founded in 2015) proves that this is true.

The moat is not in computer architecture. I'd say the real moat is in semiconductor fabrication.

[bilbo0s]

which can be relatively easily implemented by competitors

Oh my.

Please people, try to think back to your engineering classes. Remember the project where you worked with a group to design a processor? I do. Worst semester of my life. (Screw whoever even came up with that damn real analysis math class.) And here's the kicker, I know I'll be dating myself here, but all I had to do for my part was tape it out. Still sucked.

Not sure I'd call the necessary processor design work here "relatively easy"? Even for highly experienced, extremely bright people, this is not "relatively easy".

Far more easy to make the software a commodity. Believe me.

[sounds]

Have you ever tried to run a model from huggingface on an AMD GPU?

Semiconductor fabrication is a high risk business.

Nvidia invested heavily in CUDA and out-competed AMD (and Intel). They are working hard to keep their edge in developer mindshare, while chasing hardware profits at the same time.

[ants_everywhere]

> The moat is not in computer architecture. I'd say the real moat is in semiconductor fabrication.

In the longer run, anything that is very capital intensive, affects entire industries, and can be improved with large amounts of simulation will not be a moat for long. That's because you can increasingly use AI to explore the design space.

Compute not a commodity yet but may be in a few years. Semiconductor fab will take longer, but I wouldn't be surprised to see parts of the fabrication process democratized in a few years.

Physical commodities like copper or oil can't be improved with simulation so they don't fall under this idea.

[recursivecaveat]

It's not like you can just stamp out a giant grid of flops and just go brrr. Getting utilization is difficult, and the closer you hew to Nvidia's tradeoffs the more you are going to come out unfavorably against a giant who's working with 10,000X your volume and decades of experience. Nvidia proprietary software is very highly embedded into everyone's stacks. The models undergo co-evolution with the hardware, so they are designed with its capabilities in mind.

It's like trying to take on UPS with some new, not quite drop-in logistics network. Theoretically its just a bunch of empty tubs shuffling around, but not so easy in practice. You have to be multiples better than the incumbent to be in contention. Keep in mind for the startups we don't really know who is setting money on fire running models in unprofitable configurations for revenue.

[PeterStuer]

I thought they assumed AI hardware would become commoditized sooner rather than later, and their play was to sell complete vertically integrated AI solution stacks, mainly a software and services play?

[arthurcolle]

Why is OpenAI a threat to Nvidia? They are still highly dependent on those GPUs

[tomrod]

Two concepts

- Monopsony is the inverse of Monopoly -- one buyer. Walmart is often a monopsony for suppliers (exclusive or near exclusive).

- Desire for vertical integration and value extraction, related to #1 but with some additional nuances

[grim_io]

Google shows that Nvidia is not necessary. How long until more follow?

[vlovich123]

If OpenAI becomes the only buyer, they can push around Nvidia and invest in alternatives to blunt their power. If OpenAI is one of many customers, then they’re not a strong bargaining position and Nvidia gets to set the terms.

[patates]

Maybe if they grow too much they'd develop their own chips. Also if one company wins, as in they wipe out the competition, they'd have much less incentive to train more and more advanced models.

[victorbjorklund]

One large customer has more bargin power than many big ones. And risk is OpenAI would try to make their own chips if they capture all the market.

[someone7x]

> commoditizing their complements

Feels like a modern euphemism for “subjugate their neighbors”.

[skybrian]

No, it’s encouraging competition and cost-cutting in a part of the market they don’t control. This can be a reason for companies to support open source, for example.

Meanwhile, the companies running data centers will look for ways to support alternatives to Nvidia. That’s how they keep costs down.

It’s a good way to play companies off each other, when it works.

[jvanderbot]

Business has always been a civilized version of war, and one which will always capture us in similar ways, so I guess wartime analogies are appropriate?

Still it feels awful black and white to phrase it that way when this is a clear net good and better alignment of incentives than before.