Why do technology giants develop their own chips? Improve performance, reduce costs, and meet specific needs


Tencent technology is no longer satisfied with relying on standard chips with strong demand. Many of the world’s largest technology companies are developing their own semiconductors. Apple, Amazon, Facebook, Tesla and Baidu are all avoiding old chip companies and committed to completing some aspects of chip development within the company.
Syed alam, Accenture’s global semiconductor director, said: “these companies increasingly want to use custom chips to meet the special requirements of their applications, rather than using the same general-purpose chips as their competitors. This enables them to better control the integration of software and hardware and distinguish them from the competition.”
Russ Shaw, a former non-executive director of dialog semiconductor, a British chip supplier, also said: “custom designed chips may have better performance and lower manufacturing cost. These specially designed chips can help reduce the energy consumption of equipment and products of specific technology companies, whether they are related to smartphones or cloud services.”
Glenn O’Donnell, research director of Forrester, a market analysis company, said: “The continuous global chip supply shortage is a problem that large technology companies need to think carefully about where to obtain chips. The epidemic has had a great impact on these supply chains, and they have accelerated their efforts to independently develop chips. Many companies have felt that their pace of innovation is limited and locked in the timetable of chip manufacturers.”
At present, almost every month, large technology companies announce new chip projects. Perhaps the most famous example appears in November 2020, when Apple announced that it would abandon Intel’s x86 architecture and independently develop the so-called M1 processor, which has now been applied to its new IMAC and iPad.
Recently, Tesla announced that it is developing chips for the supercomputer Dojo to train the artificial intelligence (AI) network of the data center. The carmaker began to produce cars equipped with custom AI chips in 2019, which can help on-board software make decisions according to what happens on the road.
Baidu also released an AI chip last month to help devices process massive data and enhance computing power. Baidu said that the “Kunlun 2” chip can be used in fields such as automatic driving and has entered the stage of mass production.
Many technology giants choose to keep certain semiconductor projects secret. It is reported that Google is about to launch its own central processing unit (CPU) for its chromebook laptop. The search giant plans to use Google CPU on chromebook and tablet computers equipped with Google Chrome operating system from around 2023. Google did not immediately respond to a request for comment.
Amazon, which operates the world’s largest cloud computing service, is developing its own network chip to power the hardware switches that transmit data in the network. If this strategy works, it will reduce Amazon’s dependence on Broadcom. Amazon has designed many other chips, and the company did not immediately respond to a request for comment.
Facebook’s chief AI scientist said in 2019 that the company was working on a new semiconductor chip that would work “completely different” from most existing designs. Facebook did not immediately respond to a request for comment.
At this stage, no technology giant wants to complete all chip development work by itself. Xiao, a former non-executive director of dialog semiconductor, said: “all this is related to the design and performance of the chip. At this stage, it is not a problem of manufacturing and wafer factories. OEM production is usually quite expensive.”
Like TSMC, establishing an advanced chip factory or wafer foundry in Taiwan costs about $10 billion and takes several years to complete. O’Donnell, research director of Forrester, said: “even Google and apple don’t want to manufacture these chips, but ask TSMC or Intel to contract.”
O’Donnell also said: “Silicon Valley lacks talents with the skills required to design high-end processors. In the past few decades, Silicon Valley has attached great importance to software, so that hardware engineering has been ignored. Making hardware is considered ‘not cool’. Although its name is still Silicon Valley, it currently employs relatively few real silicon engineers.” (reviewed by Tencent technology / Jinlu)