Nvidia's Biggest Rival Agrees to Buy an AI Startup for Over Half a Billion Dollars in Cash

AMD is leveling up its AI chip strategy against industry leader Nvidia by acquiring an AI startup.

AMD disclosed on Wednesday that it will acquire Silo AI, a Finnish startup that calls itself "Europe's largest private AI lab." The all-cash deal is worth about $665 million and is expected to close in the second half of this year.

Related: Nvidia Is 'Slowly Becoming the IBM of the AI Era,' According to the Leader of a $2 Billion AI Startup

The deal will not affect AMD's financial performance as it "unlocks a significant amount of business moving forward," AMD senior vice president Vamsi Boppana told Reuters.

The over half-a-billion dollar buy eclipses the $125 million that AMD has invested in AI companies over the past 12 months. AMD also brought France-based Mipsology and Santa Clara-based Nod.ai into the fold last year for undisclosed sums.

Nvidia also could have been an AMD acquisition, had things gone differently nearly 20 years ago: According to industry insiders, AMD almost bought Nvidia in 2006. The merger reportedly fell through because Nvidia CEO Jensen Huang wanted to lead the combined company.

^{AMD CEO Lisa Su. Photographer: Annabelle Chih/Bloomberg via Getty Images}

Nvidia currently dominates the AI chip market, with between 70% and 95% of the market share, though competition is increasing from all corners. Established chipmakers like Intel and AMD are ramping up their efforts while startups like Tenstorrent join the race too, with AMD considered in second place to Nvidia at the moment.

AMD's new acquisition, Silo AI, employs over 300 AI experts, including over 125 AI scientists with doctorate degrees. The startup operates in North America and Europe, creating both open-source AI models and custom AI solutions for clients like Unilever and Philips.

Related: Nvidia CEO Jensen Huang Turned Down a Merger Offer in the Company's Early Days, According to Insiders. Here's Why.

Boppana emphasized the wealth of AI talent at Silo AI as well as the team's experience building AI on AMD platforms in a press release. He stated that the acquisition "will further accelerate" AMD's AI development, a statement AMD CEO Lisa Su also echoed.

AI development takes millions, if not billions, of dollars. Anthropic CEO Dario Amodei stated in June that training an AI model now costs around $100 million, but "there are models in training today that are more like a billion."

Nvidia's biggest customers, Microsoft, Meta, Amazon, and Alphabet's Google, are also believed to be building their own AI chips, which could decrease their reliance on Nvidia over time. Google's environmental report last week showed that the tech giant expects to produce more emissions as it keeps investing in AI development.

Related: How Much Does It Cost to Develop and Train AI? Here's the Current Price, According to the CEO of an $18 Billion AI Startup.