Amazon, Tesla Are Among the Companies Moving More Chip Development In-House

The electronics engineer assembles the chip.
Avalon_Studio / Getty Images/iStockphoto

One way for companies to overcome the global microchip shortage is to start developing chips themselves — something a few of the world’s mightiest corporations are reportedly doing.

See: GM Plans To Halt Production Due to Chip Shortage Starting Labor Day
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Apple, Amazon, Facebook, Tesla and Baidu are among the names looking to reduce their reliance on third-party chip suppliers by bringing certain parts of the chip development process in-house, CNBC reported on Monday.

None of these companies look to manufacture the chips themselves because it would take billions of dollars and several years to build an advanced chip factory. Instead, they are focusing on chip design and performance.

This is not necessarily a new development, though it has picked up steam in recent months as companies look to deal with the world’s chip shortage. As GOBankingRates previously reported, chip demand exceeded supply even before the COVID-19 pandemic. But the situation worsened considerably when the pandemic caused a worldwide shutdown of production facilities and a massive supply-chain bottleneck.

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That bottleneck has contributed to a flurry of activity involving major brands looking to do some of the chip development themselves:

  • In November, Apple said it would move away from Intel’s x86 architecture to make its own M1 processor, which it uses in new iMacs and iPads.
  • Tesla recently announced that it’s developing a so-called “Dojo” chip to train artificial intelligence networks in data centers. Two years ago the electric vehicle maker began producing cars with its own custom AI chips that are designed to help onboard software respond to road and traffic conditions.
  • Last month Baidu launched an AI chip, called the “Kunlun 2,” which aims to help devices process large amounts of data and boost computing power.
  • According to media reports, Google is moving closer to the rollout of its own central processing units (CPUs) for its Chromebook laptops. The company will use its CPUs in Chromebooks and tablets that run on its Chrome operating system starting around 2023, CNBC noted, citing a Sept. 1 report from Nikkei Asia.
  • Amazon is developing its own networking chip that can power hardware switches that move data around networks. Such a chip would lessen Amazon’s reliance on Broadcom.
  • In 2019, Facebook‘s chief AI scientist told Bloomberg that the social media giant is working on a new class of chip that would work “very differently” than most of the existing designs.

See: 4 Critical Industries Affected by the Chip Shortage
Find: When Will the Chip Shortage End? Experts Weigh In

“Increasingly, these companies want custom-made chips fitting their applications’ specific requirements rather than use the same generic chips as their competitors,” Syed Alam, global semiconductor lead at Accenture, told CNBC. “This gives them more control over the integration of software and hardware while differentiating them from their competition.”

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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