Microsoft hopes that the chip will outperform the ones it currently buys. Credit: Zapp2Photo via Shutterstock.

Microsoft is bolstering its artificial intelligence (AI) capabilities by reportedly developing its own AI chip that could power large-language models capable of generating human-like responses.

The US software giant has been working on the project since 2019, The Information reported, citing, two sources familiar with the development.

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Code-named Athena, some Microsoft and OpenAI employees are already testing the chip, one of the sources said.

Microsoft hopes that the chip will outperform the ones it currently purchases from other manufacturers, saving it time and money on its expensive AI projects.

The development of an AI chip could also give Microsoft a competitive advantage over other tech giants such as Google and Amazon, who already have their own AI chips.

Currently, Nvidia dominates this chip market.

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Microsoft’s own AI chip is not expected to act as a replacement for Nvidia’s, but it could drastically reduce costs as the company pushes to bring out AI-powered functionality in Bing, Office programmes, GitHub, and other places.

The Windows maker, which was one of the early backers of OpenAI’s ChatGPT, is accelerating the launch of its chips following the success of the AI chatbot launched in November 2022, reported Reuters, citing The Information.

Earlier this year, the company, leveraging its partnership with OpenAI, launched AI-powered Bing as big tech giants push to dominate the AI space.

Last week, Amazon Web Services, the cloud services provider of Amazon, launched a suite of generative AI tools to help build and scale AI-powered apps.