Amazon could spin off its Graviton and Trainium chip units into a third-party vendor once manufacturing capacity surpasses AWS demand, aiming to leverage in-house AI chip expertise to compete externally. This move would mark Amazon’s entry into the external semiconductor market.

The internal AWS chip segment has reached a $20 billion annual revenue run rate on custom chip usage, with projections suggesting external sales could expand segment revenues to $50 billion. Scale-up hinges on securing additional production capacity before offloading excess chips.