Meta Abandons Advanced AI Chip Development
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy META?
Source: seekingalpha
- Chip Development Challenges: Meta has recently scrapped its most advanced AI training chip, Iris, shifting focus to a simpler version, highlighting the design difficulties faced in competing with Nvidia, which may impact its long-term AI infrastructure development.
- Collaborations and Rentals: Meta has secured multiple partnerships with AMD, Nvidia, and Google, including a multi-billion-dollar deal to rent AI chips from Google, aiming to leverage external resources to compensate for internal development shortcomings and ensure the continuity of its AI projects.
- Design Complexity: The new Olympus chip design is based on the complex SIMT computing approach, which, while aiding software engineers, increases hardware design challenges that could lead to development delays, potentially undermining Meta's competitiveness in the AI sector.
- Market Competition Pressure: Meta aims to complete the Olympus design by Q4 2026, but the typical lengthy mass production timeline for new chips may place it at a disadvantage against OpenAI and Google, forcing it to continue relying on external chip suppliers.
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Analyst Views on META
Wall Street analysts forecast META stock price to rise
44 Analyst Rating
37 Buy
6 Hold
1 Sell
Strong Buy
Current: 653.690
Low
655.15
Averages
824.71
High
1117
Current: 653.690
Low
655.15
Averages
824.71
High
1117
About META
Meta Platforms, Inc. is building human connections, powered by artificial intelligence and immersive technologies. The Company's products enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality (VR) and mixed reality (MR) headsets, augmented reality (AR), and wearables. It also helps people discover and learn about what is going on in the world around them, enabling people to share their experiences, ideas, photos, videos, and other content with audiences ranging from their closest family members and friends to the public at large. The Company's segments include Family of Apps (FoA) and Reality Labs (RL). FoA segment includes Facebook, Instagram, Messenger, WhatsApp and Threads. RL segment includes its virtual, augmented, and mixed reality related consumer hardware, software and content. Its product offerings in VR include its Meta Quest devices, as well as software and content available through the Meta Horizon Store.
About the author

Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Celebrity Presence: Mark Zuckerberg, CEO of Meta, and his wife Priscilla Chan attended the front row, fueling speculation about a potential collaboration between Prada and Meta for smart glasses, highlighting the intersection of fashion and technology.
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- Structural Shifts: Rising memory prices may lead manufacturers to prioritize mid- to high-end models, with some potentially exiting the low-end market, fundamentally altering market dynamics and impacting the overall industry landscape.
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- Pessimistic Market Forecast: The International Data Corporation (IDC) reports that the global smartphone market is expected to shrink by 13% in 2026, marking a historic low, primarily due to dwindling memory supplies driving up device prices, which negatively impacts consumer purchasing willingness.
- Sharp Decline in Shipments: Counterpoint Research projects a 12% year-on-year drop in global smartphone shipments in 2026, the largest decline on record, with 2023 shipments expected to hit their lowest levels since 2013, indicating a drastic reduction in market demand.
- Chip Shortage Impact: The fierce investment in AI infrastructure has strained memory chip inventories, forcing smartphone manufacturers to queue in the supply chain, leading to price surges that further compress profit margins and may compel manufacturers to pass costs onto consumers.
- Structural Market Changes: As profit margins in the low-end market shrink, manufacturers may prioritize sales of mid- to high-end models, with some potentially exiting the low-end market entirely, while the secondary smartphone market is expected to grow as consumers are priced out by rising memory costs.
See More
- Chip Development Challenges: Meta has recently scrapped its most advanced AI training chip, Iris, shifting focus to a simpler version, highlighting the design difficulties faced in competing with Nvidia, which may impact its long-term AI infrastructure development.
- Collaborations and Rentals: Meta has secured multiple partnerships with AMD, Nvidia, and Google, including a multi-billion-dollar deal to rent AI chips from Google, aiming to leverage external resources to compensate for internal development shortcomings and ensure the continuity of its AI projects.
- Design Complexity: The new Olympus chip design is based on the complex SIMT computing approach, which, while aiding software engineers, increases hardware design challenges that could lead to development delays, potentially undermining Meta's competitiveness in the AI sector.
- Market Competition Pressure: Meta aims to complete the Olympus design by Q4 2026, but the typical lengthy mass production timeline for new chips may place it at a disadvantage against OpenAI and Google, forcing it to continue relying on external chip suppliers.
See More
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- Expanding Customer Base: Beyond major tech firms like Meta, OpenAI, Amazon, and Microsoft, Nvidia's sovereign AI business has tripled to $30 billion in the past year, indicating its growing influence in the global market.
- Market Potential: Nvidia expects the sovereign AI market to grow in line with the AI infrastructure market, as governments seek to control their AI platforms, positioning Nvidia as a key partner for driving long-term growth.
- Strategic Implications: The rise of sovereign AI could become a national-level infrastructure similar to electricity and the internet, with Nvidia's involvement promising substantial returns for shareholders and enhancing the company's position in the global tech ecosystem.
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