Tech giants are rushing to invest in this sector. What happened ?

Tech giants such as Apple, Amazon, Tesla, Baidu and Facebook are moving away from existing chip companies and looking to design their own semiconductor chips in-house.

“Increasingly, these companies want chips tailored to meet specific application requirements rather than using the same generic chips as their competitors,” said Syed Alam, global head of semiconductors at Accenture.

“This gives them more control over the integration of software and hardware while setting them apart from their competition,” Alam added.

And the former non-executive director of Dialog Semiconductor in the UK, Ross Shaw, said custom-designed chips could perform better and be cheaper.

“These chips can help reduce the power consumption of the specific technology company’s devices and products, whether related to smartphones or cloud computing services,” Xu said.

In turn, Glenn O’Donnell, director of research at analytics firm Forrester, justified the rush of global tech companies to manufacture their own chips, to the continuing shortage of global semiconductors.

Recently, not a month goes by without a tech giant announcing a new chip production project.

Perhaps the most notable example came in November 2020 when Apple announced that it was moving away from Intel’s x86 architecture to manufacture its own M1 processor, which can now be found in new iMacs. and iPad.

Recently, Tesla announced that it is building a “Dojo” chip to form AI networks in data centers. In 2019, the automaker started producing cars with custom AI chips that help onboard software make decisions in response to what’s happening on the road.

Last month, Baidu also launched an artificial intelligence chip designed to help devices process massive amounts of data and increase computing power. Baidu said that the “Kunlun 2” chip can be used in areas such as autonomous driving and has entered mass production.

Some tech giants have chosen to keep certain semiconductor projects secret. Google is said to be set to roll out its own processors for Chromebook laptops by 2023, according to a report from Nikkei Asia.

Amazon, which operates the world’s largest cloud computing service, is also developing its own network chip to power switches on devices that transmit data over networks.

Design, not manufacture

At this point, none of the tech giants are looking to do all of the chip development on their own.

“It all depends on the design and performance of the chip,” Shaw said. “At this point it’s not about manufacturing and foundry operations, which are very expensive.”

Setting up an advanced chip factory, or foundry, like TSMC in Taiwan, costs around $ 10 billion and takes several years.

“Even Google and Apple are conservative in building these foundries,” O’Donnell said. “And they’ll go to TSMC or even Intel to build their chips.”