Microsoft Delays AI Chip as Company Faces Challenges Competing with NVIDIA

Microsoft’s ambitious plans to develop its own AI chips have faced significant setbacks, forcing the company to rethink its approach. According to a recent report from The Information, design issues have caused delays in the company’s Braga AI chip, which was initially expected to enter mass production in 2025.

This delay has raised concerns about the competitiveness of the chips, particularly in relation to NVIDIA’s powerful AI processors.

Microsoft, like other tech giants such as Amazon and Google, has been working on in-house AI chips to reduce reliance on NVIDIA’s expensive solutions. However, as a company primarily focused on software, Microsoft has limited experience in chip design, which has made the process more challenging. With the Braga chip now delayed, the company has adjusted its timeline and plans to launch an intermediary AI chip in 2027, positioned between Braga and its successors.

This new chip, potentially called Maia 280, will reportedly combine two Braga chips to enhance performance, targeting a 30% improvement in efficiency over NVIDIA’s 2027 offerings. Microsoft’s goal is to eventually produce hundreds of thousands of AI chips annually, aiming to compete with NVIDIA in performance-per-watt, a key area for AI applications. Despite these efforts, NVIDIA remains the undisputed leader in the AI chip market, with its Blackwell GPUs currently shipping and its next-generation Rubin chips on the horizon.

As interest in custom AI chips continues to rise, companies like Broadcom and Marvel are seeing increased demand for their own designs. However, the market remains dominated by NVIDIA, whose competitive edge remains a major obstacle for others attempting to break in.

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