Nvidia and AMD, leading companies in the artificial intelligence (AI) chip market, have simultaneously placed bets on the AI startup xAI. Founded by Elon Musk, xAI focuses on developing AI chatbot services similar to OpenAI's ChatGPT. In a situation where global big tech corporations are accelerating their own AI chip development, xAI, which constructed the world's largest AI supercomputer this year, has emerged as a significant customer that Nvidia and AMD cannot afford to miss.
xAI announced on the 23rd that Nvidia and AMD participated as strategic investors in a $6 billion (approximately 8.75 trillion won) Series C funding round completed earlier this month. A total of 97 entities participated in this investment, including these corporations, Silicon Valley's leading venture capital firm Andreessen Horowitz (A16Z), the world's largest asset manager BlackRock, and sovereign wealth funds from Saudi Arabia and Qatar. xAI stated, "The funds secured will be used to launch groundbreaking products that billions will use in the future." The valuation of xAI has risen to $50 billion (approximately 73.21 trillion won), more than doubling from $24 billion (approximately 35.14 trillion won) at the time of Series B funding in May.
xAI is a company Musk founded in July 2023 in opposition to OpenAI. Musk, who was an early member of OpenAI, has a longstanding connection, having received the first AI supercomputer, "DGX-1," directly from Nvidia CEO Jensen Huang in 2016. This is the first time Nvidia and AMD, which hold major clients such as Microsoft, Alphabet, Meta, and Amazon, have participated in xAI's funding. While the specifics of their investment scale have not been disclosed, xAI explained, "Nvidia and AMD are actively supporting the expansion of xAI's infrastructure."
Analysts suggest that the recent investment by Nvidia and AMD is a strategy to prepare for the trend of big tech companies developing their own AI chips. Until now, global cloud service providers (CSP) such as Microsoft, Alphabet, Amazon, and Meta have purchased millions of Nvidia AI chips, but to reduce expenses, these corporations have recently partnered with chip design firms such as Broadcom and Marvell to develop their own AI chips. According to the market research firm Omdia, this year Microsoft purchased 485,000 of Nvidia's flagship AI Hopper chips. Meta acquired 224,000, Amazon 196,000, and Google 169,000 Hopper chips. The per-unit price hovers around $30,000 (approximately 44 million won), and high operational expenses have led the industry to refer to it as the "Nvidia tax."
Amid this, xAI is a reliable customer for Nvidia and AMD. In this announcement, xAI stated that it has built the world's largest AI supercomputer, "Colossus," since attracting Series B investment in May. xAI noted, "Colossus has successfully become fully operational in just 122 days, compared to the industry timetable that typically takes several years," adding that it plans to double the size of Colossus, intending to use 200,000 Nvidia Hopper AI chips for this expansion. xAI's AI reasoning model, "Grok2," is being provided for free based on the social media platform previously known as Twitter (now X), which Musk acquired. This model is equipped with reasoning capabilities like ChatGPT, supporting web search and image generation functions. The industry assesses that Musk's push to accelerate AI development by leveraging external capital for building large-scale data centers is likely to soon threaten the current leader, OpenAI.