Microsoft’s AI Chip Effort Falls Behind

Microsoft has spent years designing its own artificial intelligence chips, in part to reduce its dependence on Nvidia. It isn’t going so well.

The software giant, which Nvidia employees say was its largest customer by revenue last year, is taking much longer than expected to design its latest-generation AI chips, raising the possibility that the new chips will be even less competitive with Nvidia’s by the time they go into mass production. Microsoft’s problems highlight how the rapid pace of AI development is making it harder for companies to develop specialized AI chips that can keep up with Nvidia’s more general-purpose processors, which lead the industry in performance.