Google CEO Sundar Pichai talks about the company’s third-generation artificial intelligence chips.

Source: YouTube screenshot

Not content with relying on popular standard chips, some of the world’s largest tech companies are developing their own semiconductors.

Apple, Amazon, Facebook, You’re here and Baidu shun all established chip companies and bring some aspects of chip development in-house, according to company announcements and media reports.

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

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

Russ Shaw, former non-executive director of the British company Semiconductor dialogue, told CNBC that custom-designed chips can perform better and cost less.

“These specially designed chips can help reduce the power consumption of the specific technology company’s devices and products, whether smartphones or cloud services,” Shaw said.

The global chip shortage ongoing is another reason big tech companies think twice about where their chips come from, Glenn O’Donnell, research director at analyst firm Forrester, told CNBC. “The pandemic has thrown a big wrench into these supply chains, which has accelerated efforts to manufacture their own chips.”

“Many already felt limited in their pace of innovation being locked into chipmaker deadlines,” O’Donnell said.

AI chips and more

Right now, barely a month goes by without a big tech company announcing a new chip project.

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

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

Baidu last month launched an AI chip designed to help devices process huge amounts of data and increase computing power. Baidu said 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 some semiconductor projects secret.

Google is would approach to deploy its own central processing units, or processors, for its Chromebook laptops. The search giant plans to use its processors in Chromebooks and tablets running on the company’s Chrome operating system from around 2023, according to a report by Nikkei Asia on September 1. Google did not immediately respond to a request for comment from CNBC.

Amazon, which operates the world’s largest cloud service, is develop your own network chip to power the hardware switches that move data across networks. If it works, it would reduce Amazon’s dependence on Broadcom. Amazon, which already designs a number of other chips, did not immediately respond to a request for comment from CNBC.

Facebook’s Chief AI Scientist says Bloomberg in 2019, that the company is working on a new class of semiconductors that would perform “very differently” from most existing designs. Facebook did not immediately respond to a request for comment from CNBC.

Design but 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 foundries, which is very expensive.”

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

“Even Google and Apple are reluctant to build them,” O’Donnell said. “They will go to TSMC or even Intelligence to build their chips. “

O’Donnell said there was a shortage of people in Silicon Valley with the skills to design high-end processors. “Silicon Valley has put so much emphasis on software over the past few decades that hardware engineering has been seen as a bit anachronistic,” he said.

“It’s become ‘uncool’ to make material,” said O’Donnell. “Despite its name, Silicon Valley now employs relatively few real silicon engineers.”

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