How Satya Nadella intervened to resolve 'chip feud' between Nvidia and Microsoft

Serious differences emerged between Microsoft and Nvidia, and the two companies reportedly crossed swords over AI chip design for months before the issue was resolved following Satya Nadella’s intervention.

With Nvidia CEO Jensen Huang in complete control of how chips are allocated and installed, the company had a major confrontation with Microsoft which is one of its client, as per a report in media outlet The Information. Earlier, the Nvidia CEO explained that the company decides how chips are allocated to prevent tech giants from stockpiling them during periods of limited supply. The emerging situation led to tension between Microsoft and Nvidia.

As per the report, Nvidia was attempting to not only decide allocation of chips but also installing them within data centres while focusing on the server rack configuration. “The company did not like how Microsoft utilised the purchased hardware after which the disagreement escalated into a feud as Nvidia tried to convince Microsoft to adopt its next flagship chip GB200 within the server rack design specified by Jensen Huang's company.”

According to the report, the way Nvidia wanted chips to be installed could have taken a toll on Microsoft’s ability to switch to different AI chips.

After remaining unresolved for several weeks, the dispute finally reached Microsoft CEO Satya Nadella’s desk and he put an end to the stalemate by making Nvidia to back down on its demands. The report also claimed that Jensen Huang has since been worried about whether companies like Microsoft and Amazon Web Services are going to run out of data centre space.