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Explained: Why tech giants are making customised chips

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The global chip shortage is a key factor behind this move. Further, the likes of Apple, Tesla and Google are finding it more cost-effective to integrate their software with their in-house semiconductors instead of using the generic chips available to all.

Explained: Why tech giants are making customised chips
Tech giants like Apple, Amazon, Facebook, Tesla and Google, among others, are now investing heavily in infrastructure to develop their own semiconductor chips. This move will not only fulfil their specific requirements but also end their dependence on other companies for chips.
The global chip shortage due to disruptions in the supply chains is one of the key factors that prompted several Big Tech giants to take things into their own hands.
It will be easier and more cost-effective to design their chips, experts believe.
The tech companies are finding it more lucrative to integrate their software with their tailor-made semiconductors rather than use the same generic chips that are being used by their competitors, a CNBC report added.
Why tech giants are going DIY
Custom-designed chips can perform better and work out cheaper for these companies, Russ Shaw, a former non-executive director at UK-based Dialog Semiconductor, told CNBC. “These specifically designed chips can help to reduce energy consumption for devices and products from the specific tech company, whether it relates to smartphones or cloud services,” Shaw explained.
The global chip shortage has slowed down production and these firms are iffy about relying on semiconductor makers anymore. “The pandemic threw a big wrench in these supply chains, which accelerated efforts to do their own chips…Many already felt limited in their innovation pace being locked into chipmaker timelines,” Glenn O’Donnell, Research Director at analyst firm Forrester, was quoted as saying in the report.
One prime example of a large tech company producing its own chips is Apple’s M1 processors, which it launched recently for its latest generation of Macbooks and iPads, moving away from Intel’s x86 architecture-based processors.
Tesla also moved in that direction when it started producing cars with custom AI chips in 2019 that aid software in making quick-response decisions based on the movement on the roads. The company has recently announced its plans to make its own ‘Dojo’ chips, reported CNBC.
Google too is reportedly nearer to fabricating its own CPUs for its Chromebook line of laptops, which use its custom-designed Chrome operating systems. Amazon, Facebook and Baidu are two other companies that are also working in this direction.
The report added that at this stage none of the tech giants is looking to do all the chip development themselves, since setting up an advanced chip factory costs billions of dollars and takes several years.