Tech Companies Bring Chip Design In-House

Pandemic, Need to Stand-Out Drive Shift

Apple (AAPL), Amazon (AMZN), Google (GOOG), Baidu (BIDU), and Tesla (TSLA) are among the technology companies gearing up to produce their own semiconductors in-house. These companies are aiming to make custom semiconductors specific to their products.

By developing custom semiconductors internally, the technology companies can better control how their software and hardware integrate. The tech companies can also design the chips to reduce energy consumption of their devices. The pandemic is also hastening the shift to internal chip development because of rising prices and limited supply.

AI Gets Tech Companies’ Attention

Artificial intelligence is one main area where tech companies are trying to integrate improved chips. Apple was the first to do this, announcing in November of 2020 that it was moving away from Intel’s (INTC) semiconductors to make its own processor, which is now found in its iMacs and iPads. Meanwhile, Tesla recently announced plans to develop a chip to train AI networks found in data centers. Baidu is also developing its own chips to enable devices to process large amounts of data.

Outside of AI, Google is developing a CPU in-house for its Chromebook laptops, while Amazon is developing its own chips for its cloud networks. Amazon is trying to reduce its reliance on the chipmaker, Broadcom (BRCM).

Focus on Design Only For Now

The tech companies are not at the point where they are able to run a large-scale chip manufacturing businesses in-house. Instead they are focusing on design and performance. After all, setting up a foundry to produce chips can cost as much as $10 billion and these facilities can take several years to construct. These companies would also need to hire the talent to design high-end processors, as most of their employees have traditionally been focused on software, not hardware.

With supply chain problems expected to persist for some time and with technology companies looking for ways to differentiate themselves, custom chips are in vogue. It will be interesting to see how much money the tech companies pour into this effort and how it shapes the future.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

TLS 1.2 Encrypted
Equal Housing Lender