Uber Becomes Latest Tech Giant to Pick Amazon AI Chips

Amazon announced on Tuesday that Uber is significantly expanding its reliance on AWS cloud services, integrating more of its ride-sharing functionalities onto Amazon's proprietary chips. This expansion specifically includes increased adoption of AWS’s Graviton, a low-power, ARM-based server CPU, and the initiation of a new trial for Trainium3, AWS's advanced AI chip designed to compete with Nvidia's offerings.

Industry observers suggest this agreement serves less as a long-term threat to Nvidia and more as a direct challenge from Amazon to its primary cloud competitors, Google and Oracle.

Historically, Uber managed its own data centers. However, in 2023, the ride-hailing giant famously entered into substantial multi-year cloud computing contracts with Oracle and Google. The stated objective at the time was to migrate the majority of its IT infrastructure from its on-premise data centers to these two cloud platforms.

As recently as December, Uber publicly reaffirmed this strategic goal in a blog post, stating:

"In February 2023, Uber began transitioning from on-premise data centers to the cloud using OCI and Google Cloud Platform, taking on the dual challenge of shifting massive workloads and introducing Arm-powered compute instances into a previously x86-dominated environment."

Notably, that same blog post specifically highlighted Uber’s utilization of ARM chips developed by Ampere within Oracle’s cloud infrastructure, adding an interesting layer to the current development.

The intricate relationships within Silicon Valley are well illustrated by the history of Ampere itself.

Ampere was founded by Renee James, a former Intel executive who left after not being promoted to CEO. Leveraging her influence as an investor at private equity firm Carlyle and her board position at Oracle, James secured the necessary capital to launch Ampere. Oracle subsequently acquired approximately one-third of the company, a stake that necessitated James relinquishing her status as an independent Oracle director.

It is worth recalling that James played a crucial role on Oracle's board, helping to approve the company's $9.3 billion acquisition of NetSuite in 2016, a firm in which Larry Ellison held a significant stake. That particular deal later led to an unsuccessful shareholder lawsuit alleging Oracle had overpaid.

In December, Ampere was acquired by Softbank, a major competitor. Concurrently, Oracle divested its stake in Ampere, realizing a substantial pre-tax gain of $2.7 billion. James is slated to depart Oracle’s board at the close of 2024 and is no longer affiliated with Ampere.

Currently, Oracle is aggressively raising capital to construct data centers for OpenAI and its Stargate project. Larry Ellison justified the sale of Ampere by asserting that designing chips in-house for its data centers no longer provided a competitive advantage. Instead, Oracle now prefers to procure chips externally and has established extensive agreements with Nvidia.

It is pertinent to note that Oracle, Softbank, and Nvidia are all interconnected through a series of deals within OpenAI's ecosystem, designed to fund the model maker's ambitious data center expansion.

However, the latest announcement sees AWS securing an expanded contract from Uber, a prominent Oracle customer, precisely because AWS offers its own in-house-designed chips.

Uber now joins a growing list of major technology companies, including Anthropic, OpenAI, and Apple, that have either adopted or increased their usage of AWS due to the performance of these proprietary AI chips. In December, Amazon CEO Andy Jassy revealed that the Trainium business alone had already generated multi-billion dollar revenues.