Nvidia to take on Intel’s most profitable market with its first server microprocessors

Nvidia unveiled its first server microprocessors on Monday, extending a push into Intel’s most lucrative market with a chip aimed at handling the most complicated computing work.

The graphics chip maker has designed a central processing unit (CPU), based on technology from Arm, a company it is trying to acquire from Japan’s SoftBank Group Corp. The Swiss National Supercomputing Centre and US Department of Energy’s Los Alamos National Laboratory will be the first to use the chips in their computers, Nvidia said Monday at an online event.

Nvidia has focused mainly on graphics processing units, or GPUs, which are used to power video games and intensive computing tasks in data centers. CPUs, by contrast, are a type of chip that is more of a generalist and can do basic tasks like running operating systems. Expanding into this product category opens up more revenue opportunities for Nvidia.

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Founder and Chief Executive Officer Jensen Huang has made Nvidia the most valuable US chip maker by delivering on his promise to give graphics chips a major role in the explosion in cloud computing. Data centre revenue contributes about 40 per cent of the company’s sales, up from less than 7 per cent just five years ago. Intel still has more than 90 per cent of the market in server processors, which can sell for more than US$10,000 each.

The CPU, named Grace after the late pioneering computer scientist Grace Hopper, is designed to work closely with Nvidia graphics chips to better handle new computing problems that will come with a trillion parameters. Systems working with the new chip will be 10 times faster than those currently using a combination of Nvidia graphics chips and Intel CPUs. The new product will be available at the beginning of 2023, Nvidia said. Advanced Micro Devices is the only other maker of these X86 CPUs and graphics chips.

“The takeaway is that Nvidia is serious about CPUs and will not be constrained by X86 owned by Intel and AMD,” Hans Mosesmann, an analyst at Rosenblatt Securities, said in a research note. “The level of platform innovation is mind boggling and something that silicon competitors will be tasked to match for many, many years to come.”

Revenue in the period ending in April is expected to be higher than US$5.3 billion, which Nvidia projected on February 24, the company said Monday in a separate statement.

“We are experiencing broad-based strength, with all our market platforms driving upside to our initial outlook,” said Nvidia Chief Financial Officer Colette Kress. “Overall demand remains very strong and continues to exceed supply while our channel inventories remain quite lean. We expect demand to continue to exceed supply for much of this year.”

Nvidia is pitching the new CPU to data centre owners – hyperscalers such as Amazon’s AWS and Alphabet’s Google – as a way to harness artificial intelligence software more effectively and improve the ability to make sense of the flood of data they receive.

Training a program using a trillion data points of information might take as long as a month currently. Grace will reduce that to three days, according to Ian Buck, an Nvidia vice president. For end users of cloud services, that will lead to computers that can understand natural human language and make online automated help much more effective, he said.

The Swiss National Supercomputing Centre provides scientific computing. The decision to use Grace will help with the amount of machines it is able to deploy, CSCS director Thomas Schulthess said in an interview.

Arm technology is widely used in smartphones and other mobile technology where battery life constraints mean that chips have to be more efficient. Nvidia’s decision to use Arm’s know-how as the basis for its CPU will likely help owners of data centers who have power constraints.

Using Grace-based systems could help CSCS to move forward the art of complex calculations such as weather forecasting, Schulthess said. Computers could predict more accurately the track of a storm or even provide season-long climate outlooks to provide early warning of a drought, he said.

The new processors are made to work closely with Nvidia graphics chips for the data centre. Faster connections, new memory chips and the ability to share memory will help the overall performance of the product, Nvidia said.