AI Inference Startups Are Quietly Buying Their Own Chips

What happened: AI inference startups that lease cloud computing capacity and resell it are starting to buy their own chips as they struggle to line up enough capacity for customers. A hack of Fireworks, one of the best known of these startups, was reported this week. Why it matters: Buying chips is likely to drastically change the economics of these startups' business. Difficulty getting compute has also pushed some to seek resources from dozens of smaller neoclouds, an approach whose risk the Fireworks hack highlights.

AI inference startups that lease cloud computing capacity and resell it are starting to buy their own chips as they struggle to line up enough capacity for customers. A hack of Fireworks, one of the best known of these startups, was reported this week.

Buying chips is likely to drastically change the economics of these startups' business. Difficulty getting compute has also pushed some to seek resources from dozens of smaller neoclouds, an approach whose risk the Fireworks hack highlights.