Why Nvidia’s Hugging Face Deal Is Really About Its Biggest Threat

With roughly 85% of the AI chip market, Nvidia’s share has only one way to go. But a smaller slice of a much larger market could still mean more sales, says Umesh Padval, a Managing Partner at Seligman Ventures. “If the deal goes through, I think it’s a brilliant chess move.”

Nvidia has thrown its weight behind open-source AI in recent months. It successfully lobbied Washington to loosen restrictions on selling its chips to China, which leads in open AI development. More recently, it struck a $6 billion deal with Poolside, to develop an American open alternative. In July, Nvidia helped lead an open letter defending open-source AI and urging Washington not to restrict it. “Open models strengthen safety and cybersecurity, accelerate innovation and diffusion, and enable sovereignty,” Nvidia boss Jensen Huang wrote in his first post on X. 

Meanwhile, Google now exclusively uses its custom TPU chips to train its Gemini AI models. In August, Anthropic hired, Amir Salek, a former TPU team-lead at Google to spearhead a new in-house chip division. The same month, OpenAI shared the first results from its custom chip, Jalapeño. SemiAnalysis, the firm which conducted tests on OpenAI’s chip, said it beat “every Nvidia, AMD, and Google chip we have been able to test.”