Daily: Google, Blackstone create AI cloud venture
6.5 min read.
Highlights
Google-Blackstone cloud venture. Google and Blackstone are coming together in a joint venture to create an AI cloud firm. The alternative asset manager will provide at least US$5 billion of investment and Google will provide TPU chips. 500 megawatts of data centre capacity is expected to come online next year with more down the line.
In a separate article, Bloomberg reports that Google employees don’t have enough TPUs for their own use. Resources are going to the highest priority projects, like Gemini.
Memory capacity will take a while. Memory stocks dipped briefly after the Seagate CEO said that new factories took “too longer” to build and would risk overcapacity, a nod to the cyclical nature of the memory industry. Seagate stock fell 7%, SanDisk dropped 5% and Micron dropped 6%, among others.
Jensen expects H200 deal. Jensen Huang said that he expects Beijing to allow the import and sale of Nvidia’s H200 chips in China. It’s not clear if this is based on new information or is wishful thinking, since he also said that he didn’t discuss the H200 deal with Chinese officials during his visit alongside the Trump-Xi summit. Huang said that other officials discussed the topic, though USTR Jamieson Greer said during the summit that it did not come out in conversations between Trump and Xi and was not a major topic between officials.
Thanks for reading.
1. Policy and Geopolitics
1.1
Bloomberg (05/19): Nvidia’s CEO Sees China Opening Market to AI Chips From US
Nvidia Corp. Chief Executive Officer Jensen Huang, speaking days after he joined President Donald Trump’s summit in China, said he expects Chinese authorities to eventually allow the import of artificial intelligence chips from the US.
Huang said he didn’t discuss directly with Chinese officials the company’s effort to sell its H200 AI chips to customers in China, though he acknowledged that the topic came up during discussions between officials from both sides. “President Trump had some conversations with the leaders and I’m looking forward to what they decide,” Huang said.
1.2
Korea Times (05/19): Samsung, union hold final mediation amid looming possibility of last-minute deal
Samsung Electronics and its largest labor union resumed government-led wage mediation Tuesday, with the looming possibility of reaching a last-minute deal to avert a strike at the world’s largest memory chipmaker.
1.3
Reuters (05/18): As chip industry chases AI, U.S. national labs look to newcomers for supercomputers
In a nondescript building on Kirtland Air Force Base on the high desert of New Mexico, liquid-cooled supercomputers gurgle and hum their way through some of the most complex math problems the U.S. government seeks to solve: simulating how hypersonic nuclear weapons would move through the earth’s atmosphere, or what would happen if one nuclear warhead detonated near another.
For more than a decade, the chips handling this secretive and demanding work came from mainstream semiconductor firms like Nvidia or Advanced Micro Devices.
But with those companies increasingly designing their chips for artificial intelligence and facing supply shortages, the managers in charge of the systems at Sandia National Laboratories, which operates the machines at Kirtland and is one of three U.S. labs tasked with developing and maintaining the nation’s nuclear weapons arsenal, are increasingly unsure how they will find computing power for high-precision scientific work like theirs.
2. Economy, Finance, and Business
2.1
FT (05/19): Google makes chip push with Blackstone-backed AI cloud group
Google and Blackstone are creating an AI cloud group backed with $5bn from the alternative asset manager, in a bid to expand the reach of the tech giant’s specialised chips and mount a challenge to Nvidia.
The search company and world’s largest private capital group said on Monday that they would bring 500 megawatts of data centre capacity online next year, and scale further over time.
Google will provide the new venture with hardware including its Tensor Processing Units, the group’s custom chip created to train and deploy AI models.
2.2
Bloomberg (05/18): Kioxia’s Booming Shares Head for Liquidity Boost With US Float
Kioxia Holdings Corp.’s plan to float American Depositary Shares is setting one of the world’s hottest stocks up for a liquidity boost, tapping into the global fervor over memory chips to expand its investor base.
The company is preparing to list the ADSs on a US stock exchange, it said in a release on Friday, saying the move would help raise corporate value. Details such as the schedule and method are as yet undetermined and the company may end up not pursuing the listing, according to the release. ADSs make the actual shares available for trading, making arbitrage cheaper than in the case of depositary receipts, which Kioxia already has.
2.3
Bloomberg (05/19): Analog Devices Is Said to Near $1.5 Billion Deal for Empower
Analog Devices Inc. is in advanced talks to acquire closely held Empower Semiconductor for $1.5 billion in cash, according to people familiar with the matter.
A transaction could be announced as soon as Tuesday, said the people, who asked not to be identified because the information was private. A final agreement hasn’t been reached and the details could change, or the talks could still end without a deal, the people said.
2.4
Bloomberg (05/19): Asian Chip Export Prices Are Diverging From Volumes by Most Ever
A record divergence between prices and volumes of Asia’s chip exports is making regional trade more immune to external shocks, according to Oxford Economics.
The consultancy’s proprietary Asia chip export index surged almost 81% in value in March from a year earlier, but rose only around 28% in volume terms. While such a split usually signals a potential price peak, “the pattern appears different” this time, economists led by Betty Wang said in a report on Monday.
The widening gap reflects “significant pricing power in advanced chips supported by a healthy order pipeline,” they said. “The solid performance has helped decouple regional trade from external headwinds, including the Middle East conflict, potential energy bottlenecks, and tightening private credit conditions.”
3. Technology
3.1
Bloomberg (05/18): Seagate Slips as CEO Says New Factories ‘Take Too Long’
Seagate Technology Holdings shares fell 6.9% Monday in its worst one-day drop in nearly two months after management comments at a JPMorgan conference sparked investor fears that the company won’t be able to keep up with soaring demand for memory chips.
Chief Executive Officer Dave Mosley said building new factories would “take too long” and potentially set up the company with more capacity than it needs when asked during a Monday presentation whether Seagate plans to expand manufacturing capacity.
3.2
Bloomberg (05/19): AI Chip Startup Tenstorrent Draws Takeover Interest From Intel, Qualcomm
Artificial intelligence chip startup Tenstorrent Inc. is drawing early takeover interest from prospective buyers at a moment of renewed momentum for upstarts looking to challenge Nvidia Corp. and Advanced Micro Devices Inc.
Tenstorrent, which designs chips that it says are more efficient at running certain AI workloads, has held conversations with industry players including Intel Corp. and Qualcomm Inc., according to people familiar with the matter.
The company could be valued at more than $5 billion in a potential transaction or perhaps more depending on how valuations fare in the sector following Cerebras Systems Inc.’s recent initial public offering, some of the people said.
3.3
WSJ (05/18): Startup Makes Switching AI Chips Easier—and Nvidia Is a New Investor
Most artificial-intelligence companies are so desperate for computing capacity that they will use any advanced chip they can lay hands on, but switching to a new computing system can be complex and costly.
Decart, a San Francisco-based software startup, says it has found a way to make it easier for AI developers to switch between processors made by Nvidia, Amazon.com, Google and others. Nvidia is among the brand name companies backing the startup as part of a new $300 million round led by Radical Ventures.
3.4
Bloomberg (05/18): Google’s Own AI Researchers Jockey for Access to Its Computing
Google’s success has made its computing resources so valuable, though, that its own AI researchers have to get in line.
Dai is among current and former employees who say Google’s leadership in AI development has turned computing power into a precious resource, accessible mostly to people with high-priority projects, like improving Gemini.
“Inside Google, every TPU has three suitors,” said Oren Etzioni, a veteran AI researcher who is a professor emeritus at the University of Washington. “If you find yourself in the uncomfortable position where you have a pie-in-the-sky project and you are competing with a revenue-yielding customer, that’s a tough position to be in.”
–