Meta signs multi-billion dollar deal to rent Google's TPUs in a direct challenge to Nvidia's AI chip dominance

Meta has signed a multi-year, multi-billion dollar contract with Google to rent its AI chips—Tensor Processing Units (TPUs)—for developing new AI models. That's according to The Information. Meta is also looking into buying TPUs outright for its own data centers starting next year.

The deal takes direct aim at Nvidia, which dominates the AI chip market and has been Meta's go-to GPU supplier for AI training. Just days earlier, Meta had announced plans to buy millions of GPUs from Nvidia and AMD. Internally, Google Cloud executives have set a goal of capturing up to ten percent of Nvidia's annual revenue—roughly $200 billion—through TPU sales. Google has also launched a joint venture with an investment firm to lease TPUs to other customers.

Here's where it gets complicated: Google itself is one of Nvidia's biggest customers, since cloud customers still expect access to GPU servers. So Google has to keep buying Nvidia's latest chips to stay competitive in the cloud market, while simultaneously trying to eat into Nvidia's market share with its own silicon. OpenAI reportedly managed to negotiate 30 percent lower prices from Nvidia simply because TPUs exist as an alternative.