Why Tesla, Apple, Google And Facebook Are Designing Their Own Chips

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  • Apple, Amazon, Facebook, Tesla, and Baidu are all shunning established chip firms and bringing certain aspects of chip development in-house, according to company announcements and media reports.
  • At this stage, none of the tech giants are looking to do all the chip development themselves.
  • Setting up an advanced chip factory, or foundry, like TSMC’s in Taiwan, costs around $10 billion and takes several years.

Not content material with counting on commonplace chips that are in excessive demand, among the world’s greatest tech companies are growing their own semiconductors.

Apple, Amazon, Facebook, Tesla and Baidu are all shunning established chip companies and bringing sure points of chip growth in-house, in line with company bulletins and media experiences.

“Increasingly, these companies want custom-made chips fitting their applications’ specific requirements rather than use the same generic chips as their competitors,” Syed Alam, world semiconductor lead at Accenture, advised CNBC.

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

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Russ Shaw, a former non-executive director at U.Okay.-based Dialog Semiconductor, advised CNBC that custom-designed chips can carry out higher and work out cheaper.

“These specifically designed chips can help to reduce energy consumption for devices and products from the specific tech company, whether it relates to smartphones or cloud services,” Shaw mentioned.

The ongoing world chip scarcity is one more reason why large tech companies are considering twice about the place they get their chips from, Glenn O’Donnell, analysis director at analyst agency Forrester, advised CNBC. “The pandemic threw a big wrench in these supply chains, which accelerated efforts to do their own chips.”

“Many already felt limited in their innovation pace being locked into chipmaker timelines,” O’Donnell mentioned.

A.I. chips and extra

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At current, barely a month goes by with no Big Tech company saying a brand new chip project.

Perhaps probably the most notable instance got here in November 2020 when Apple announced it was moving away from Intel’s x86 architecture to make its own M1 processor, which now sits in its new iMacs and iPads.

More recently, Tesla announced that it is building a “Dojo” chip to train artificial intelligence networks in data centers. The automaker in 2019 started producing cars with its custom AI chips that help on-board software make decisions in response to what’s happening on the road.

Baidu last month launched an AI chip that’s designed to help devices process huge amounts of data and boost computing power. Baidu said the “Kunlun 2” chip can be used in areas such as autonomous driving and that it has entered mass production.

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Some of the tech giants have chosen to keep certain semiconductor projects under wraps.

Google is reportedly edging closer to rolling out its own central processing units, or CPUs, for its Chromebook laptops. The search giant plans to use its CPUs in Chromebooks and tablets that run on the company’s Chrome operating system from around 2023, according to a report from Nikkei Asia on Sep. 1. Google didn’t instantly reply to a CNBC request for remark.

Amazon, which operates the world’s largest cloud service, is developing its own networking chip to energy {hardware} switches that transfer information round networks. If it really works, it might cut back Amazon’s reliance on Broadcom. Amazon, which already designs quite a few different chips, didn’t instantly reply to a CNBC request for remark.

Facebook’s chief AI scientist told Bloomberg in 2019 that the company is engaged on a brand new class of semiconductors that might work “very differently” than a lot of the present designs. Facebook didn’t instantly reply to a CNBC request for remark.

Designing however not manufacturing
At this stage, not one of the tech giants are seeking to do all of the chip growth themselves.

“It is all about the design and performance of the chip,” Shaw mentioned. “At this stage, it is not about the manufacturing and foundries, which is very costly.”

Setting up a sophisticated chip manufacturing unit, or foundry, like TSMC’s in Taiwan, prices round $10 billion and takes a number of years.

“Even Google and Apple are reticent to build these,” O’Donnell mentioned. “They’ll go to TSMC or even Intel to build their chips.”

O’Donnell mentioned there is a scarcity of individuals in Silicon Valley with the talents required to design excessive end-processors. “Silicon Valley put so much emphasis on software over the past few decades that hardware engineering was seen as a bit of an anachronism,” he mentioned.

“It became ‘uncool’ to do hardware,” O’Donnell mentioned. “Despite its name, Silicon Valley now employs relatively few real silicon engineers.”

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