Some of the world’s biggest tech companies are shifting to homemade chips. Analysts put forward many reasons why. But the trend, despite being moving in that direction, does suggest the companies will not take over chip development entirely. They are still expected to rely on traditional providers as they learn the art of chip-making for themselves. Some of these companies include Apple, Amazon, Facebook and Tesla.
Costs and control
Two factors are largely influencing the tech giants’ decision whether to dab into chip development or not. “Setting up an advanced chip factory, or foundry, like TSMC’s in Taiwan, costs around $10 billion and takes several years,” Sam Shead writes for CNBC.
The idea is to not only be able to have a more rigid hold on costs, but also control the supply of semiconductors. The large tech companies are, understandably, large consumers of chips. The idea for the – going into development – is to be able to meet their own needs, whilst also reducing their costs.
In July, media reports pointed out that Apple was wary of falling short of enough chips to produce its iconic iPhone. “Tech giant Apple said that the global chip shortage could affect iPhone production and the company also forecasted slowing revenue growth,” The Business Standard wrote.
Indeed, Tim Cook, Apple’s CEO said “chips affected by the shortages are made using older technology…”
“Increasingly, these companies want custom-made chips fitting their applications’ specific requirements rather than use the same generic chips as their competitors. This gives them more control over the integration of software and hardware while differentiating them from their competition,” says Syed Alam, Accenture’s Global Semiconductor Lead told CNBC.
One of the reasons advances behind the chip shortage is simply the pandemic. Supply chains, largely affected by a reduced workforce and increased demands, are not expected to be able to reverse this trend for another two years. What has been impacting the tech industry at large is also having severe consequences on automakers and other industries.
The greener grass of home?
Another benefit of this home-grown piece of tech would be likely reductions in energy consumption for specific products and their companies. Since the chips would be custom-devised, they could be more efficient, responding better to the precise needs, whether in terms of cloud technology or smartphones.
For instance, Apple has switched the Intel x86 for an in-house M1 processor. This is now what is used for the new iMacs and iPads. Tesla, in the field of car technology, is moving to AI chips “building a “Dojo” chip to train artificial intelligence networks in data centres” according to CNBC. The new Chromebooks by Google are also likely to have their own CPUs in the company’s latest fad development.
But we’re not likely to know much more as tech giants choose to keep their projects tight to their chests. What is known is that Silicon Valley is finding it hard to churn out the minds behind some of the world’s finest processors. With the recent years’ focus on software, chip development has taken a backseat. Therefore, although tech giants may want to branch off into making their own semi-conductors, it could be a while before they have the full desired brainpower to do so.