Microsoft's ambitious plans to mass-produce its next-generation AI chip, code-named Braga, have reportedly hit a significant delay, with production now expected in 2026 instead of this year. This development, as reported by The Information on Friday, has been attributed to unexpected design revisions, staffing issues, and a high rate of employee turnover within the project team.

Initially slated to power Microsoft’s data centers by the end of 2025, the Braga chip is the successor to the Maia AI chip, which was introduced in November 2023. According to the report citing three individuals directly involved in the project, the Braga chip is not only delayed but is also expected to significantly underperform when compared to Nvidia’s Blackwell chip, which launched in late 2024 and is currently leading the market in AI chip performance.

The delay marks a setback in Microsoft’s broader strategy to reduce its dependency on Nvidia’s GPUs—currently the dominant force in AI hardware—and establish itself as a serious contender in the custom chip space. Microsoft has not issued an official comment in response to the report, as noted by Reuters.

The push for custom chips has become a defining trend among major cloud providers. Like its tech rivals Amazon and Alphabet (Google), Microsoft has invested heavily in in-house silicon to support the exponential growth in demand for AI computing. These custom processors are not only crucial for boosting performance but also for managing rising operational costs in AI workloads.

Despite introducing the Maia chip in late 2023, Microsoft has struggled to scale production in line with competitors. Google's Tensor Processing Units (TPUs), for example, have been pivotal in powering many of its AI services. The search giant recently launched its seventh-generation TPU in April 2025, with notable performance upgrades designed to accelerate large-scale AI applications.

Meanwhile, Amazon continues to make strides with its Trainium chip line. In December 2024, the company unveiled Trainium3, its next-gen AI processor, scheduled for release later this year, promising improved training speeds and energy efficiency.

Microsoft’s delay could give both Amazon and Google further time to cement their positions in the AI chip arena. Moreover, the setback may compel Microsoft to lean more on third-party chipmakers like Nvidia and possibly consider interim solutions to meet its data center demands.

In a related development, OpenAI—the AI research lab heavily backed by Microsoft—was recently reported to be testing Google’s AI chips to power some of its products. This move hints at the broader industry reality: even AI leaders may be forced to look beyond their preferred partnerships when custom solutions lag in readiness.

As the race for AI supremacy intensifies, delays like Braga’s could have far-reaching consequences—not just for Microsoft, but for the entire ecosystem of AI infrastructure.