By Max A. Cherney and Arsheeya Bajwa

TAIPEI (Reuters) -Advanced Micro Devices unveiled its latest artificial intelligence processors on Monday and detailed its plan to develop AI chips over the next two years in a bid to challenge industry leader Nvidia.

At the Computex technology trade show in Taipei, AMD CEO Lisa Su introduced the MI325X accelerator, which is set to be made available in the fourth quarter of 2024.

The race to develop generative artificial intelligence programs has led to towering demand for the advanced chips used in AI data centers able to support these complex applications.

AMD has been vying to compete against Nvidia, which currently dominates the lucrative market for AI semiconductors and commands about 80% of its share.

Since last year, Nvidia has made it clear to investors that it plans to shorten its release cycle to annually, and now AMD has followed suit.

“AI is clearly our number one priority as a company and we have really harnessed all of the development capability within the company to do that,” Su told reporters.

“This annual cadence is something that is there because the market requires newer products and newer capabilities… Every year we have the next big thing such that we always have the most competitive portfolio.”

AMD also introduced an upcoming series of chips titled MI350, which is expected to be available in 2025 and will be based on new chip architecture.

Compared to the currently available MI300 series of AI chips, AMD said it expects the MI350 to perform 35 times better in inference – the process of computing generative AI responses.

Additionally, AMD revealed the MI400 series, which will arrive in 2026 and will be based on an architecture called “Next”.

Nvidia CEO Jensen Huang had said on Sunday the company’s next-generation AI chip platform called Rubin, set to be rolled out in 2026, would include GPUs, CPUs and networking chips.

Investors, who have poured billions of dollars into Wall Street’s picks-and-shovels trade, have been seeking longer-term updates from chip firms to evaluate the longevity of the booming genAI rally, which so far has shown no signs of slowing down.

AMD shares were flat, while Nvidia was up more than 3% on Monday. AMD has more than doubled in value since the start of 2023, but the surge pales in comparison to the more than seven-fold rise in Nvidia’s shares in the same period.

“While the proof will be in the pudding, there’s no doubt that AMD is taking Nvidia heads-on and companies looking for alternatives to Nvidia are bound to be happy to hear what AMD had to say,” said Technalysis Research chief analyst Bob O’Donnell.

AMD’s Su said in April the company expects AI chip sales of roughly $4 billion for 2024, an increase of $500 million from its prior estimate.

At the Computex event, AMD said its latest generation of central processor units will likely be available in the second half of 2024.

While businesses generally prioritize spending on AI chips in data centers, some of AMD’s CPUs are used in conjunction with graphics processor units, though the ratio is skewed in favor of GPUs.

AMD detailed architecture for its new neural processing units (NPUs), which are dedicated to handling on-device AI tasks in AI PCs.

Chipmakers have been banking on added AI capabilities to drive growth in the PC market as it emerges from a years-long slump.

PC providers such as HP and Lenovo will release devices which include AMD’s AI PC chips. AMD said its processors exceed Microsoft’s Copilot+ PC requirements.

(Reporting by Max A Cherney and Ben Blanchard in Taipei and Arsheeya Bajwa in Bengaluru; Editing by Will Dunham, Rashmi Aich and Arun Koyyur)