Amazon takes chip production in-house

The move will enable the firm to avoid supply chain disruptions and improve its own infrastructure

Amazon is said to be working on custom networking chips for its hardware switches, to improve the company's internal infrastructure and lower its reliance on third parties.

Multiple sources claim that Amazon's new silicon effort is the result of its $350 million (£254 million) acquisition of Israeli chipmaker firm Annapurna Labs in 2015.

Amazon plans to use the in-house chips to enhance its AI services, improve AWS infrastructure and speed up the data centre servers of its cloud division. It would also help Amazon reduce its reliance on Broadcom, which supplies chips for Amazon's current in-house network switches.

In April 2020, Broadcom made it mandatory for customers to place orders at least six months in advance, instead of the usual two to three months.

Broadcom's VP of sales Nilesh Mistry said that the company was compelled to take the step because of the unreliable transport options caused by the pandemic.

It is unclear Broadcom's decision influenced Amazon's move, but producing chips internally will certainly help the e-commerce giant to avoid supply chain disruptions.

This is not the first time that Amazon has worked to develop a custom silicon product. The company has previously worked with Taiwain's MediaTek to design a chip for Echo smart speaker products, which Amazon used to improve Alexa's responses.

Amazon is also working on a custom machine learning chip, dubbed Trainium, which it says will provide high performance when training ML models on cloud platforms. AWS is expected to make the chip available to its customers in coming months.

Amazon's new strategy comes at the time when automakers and others are dealing with a global chip shortage.

Last week, Intel announced that it was working on plans to set up a new, independent division to make processors for other chipmakers based on their own designs.

CEO Pat Gelsinger said that the company would spend tens of billions of dollars on new manufacturing plants to build significant extra capacity, so that Intel could make other companies' chips for them.

Intel has repeatedly missed chipmaking targets over recent years. As a result, its newest desktop chips use older transistor technology than devices from Apple and AMD.

In related news, British chip architecture firm Arm Ltd on Wednesday unveiled a new generation of chip architecture. The firm hopes it will be used in more than 300 billion chips in the next decade.

The new architecture - called V9 or ARMv9 - is focused on security, AI and overall computing power. Arm says it will raise the performance of future mobile and cloud chips by more than 30 per cent.