Tech Giants will Fight the Chip Shortage with Local Manufacturing

Tech Companies Via Unsplash - Mimi Thian
Tech Companies Via Unsplash - Mimi Thian

Relying on standard chips that are in high demand is making the chip shortage across the world a dilemma for several countries. However, this might change soon with big tech firms developing their own semiconductors.  

For instance, according to company announcements and many media reports, Amazon, Facebook, Apple, Tesla, and Baidu have all showed their intent to establish chip forms. The chip development in-house might be starting by the end of this year for several companies. 

 “Increasingly, these companies want custom-made chips fitting their applications’ specific requirements rather than use the same generic chips as their competitors,” Syed Alam, global semiconductor lead at Accenture, told CNBC in an interview.

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“This gives them more control over the integration of software and hardware while differentiating them from their competition,” Alam added.

Russ Shaw, a former non-executive director at U.K.-based Dialog Semiconductor, told CNBC that custom-designed chips can perform better and work out cheaper.

“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 said.

After the Covid-19 pandemic had hit the world, an ongoing global chip shortage has caused chaos in several industries. However, tech giants have considered starting to make their own chips instead of relying on importation. 

Glenn O’Donnell, research director at analyst firm Forrester, told CNBC. “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,” O’Donnell said.

No chip manufacturing yet

As of this writing, no tech company has yet announced an official launch of a chip manufacturing project. Apple announced in November 2020 that it will move away from Intel’s x86 architecture and will start making its M1 process, but this has not come or even started yet.

Meanwhile, Tesla announced that it’s building a “Dojo” chip to train Artificial Intelligence networks in data centers. The electric cars automaker has already produced several custom AI cars in 2019. The custom AI chips are set to help onboard software to make wiser decisions on the road.