In a high-stakes clash, Microsoft CEO Satya Nadella was compelled to step in to resolve a prolonged dispute with Nvidia over the design of an AI chip, as reported by The Information.
The conflict originated from Nvidia CEO Jensen Huang’s stringent control over his company’s chip distribution, sparking months of tension with Microsoft. Huang has maintained tight oversight to prevent stockpiling during supply shortages.
The crux of the disagreement centered on Nvidia’s attempt to dictate server rack configurations in Microsoft’s data centers, which could hinder Microsoft’s flexibility in switching AI chips. Sources revealed that this contention led to the development of Nvidia’s upcoming GB200 chip with a rack design mandated by Huang.
The prolonged argument escalated to Nadella, who ultimately persuaded Nvidia to retract their demands. Huang’s concerns about server space shortages in data centers like those of Microsoft and AWS were at the heart of the issue.
This feud impacted Nvidia’s stock, which fell for the third session on June 24, dragging the chip stocks index down by 3.02% during Asian trading hours, according to Reuters. Nvidia’s stock has dropped 13% since briefly surpassing Microsoft as the world’s most valuable company last week, Bloomberg reported.
The semiconductor giant has been vying with Microsoft and Apple for the title of the world’s most valuable company, marking a fierce competition among tech behemoths.
