Why Amazon, Google, and Microsoft Are Designing Their Own Chips
All the biggest tech companies are prioritizing custom designs, which adds to the growing problems facing the incumbents.
In the process of transforming itself from an online bookstore into a cloud computing giant, Amazon.com Inc. became one of the world’s largest purchasers of the computer chips that power data centers. As its cloud business has expanded, the company has become increasingly fixated on designing its own chips instead of buying them. The shift could have potentially drastic implications for a critical aspect of the technology industry—and could prove threatening for traditional chipmakers such as Intel Corp. and Advanced Micro Devices Inc.
Amazon began signaling its intentions in 2015 when it acquired Annapurna Labs, a small Israeli chip designer. It’s since become aggressive about developing chips specifically designed for Amazon Web Services’ own data centers. “This work is foundational—when we improve the hardware, everything that runs on it improves,” says Nafea Bshara, an Annapurna co-founder who’s now an AWS vice president. Annapurna’s staff has grown tenfold since the acquisition.