● In the process of transforming itself from an online bookstore into a cloud computing giant, Amazon became one of the world’s largest purchasers of the computer chips that power data centers. As its cloud business has expanded, the company has become increasingly fixated on designing its own chips instead of buying them. The shift could have potentially drastic implications for a critical aspect of the technology industry—and could prove threatening for traditional chipmakers such as Intel and Advanced Micro Devices.
● Amazon began signaling its intentions in 2015 when it acquired Annapurna Labs, a small Israeli chip designer. It’s since become aggressive about developing chips specifically designed for Amazon Web Services’ own data centers. “This work is foundational—when we improve the hardware, everything that runs on it improves,” says Nafea Bshara, an Annapurna co-founder who’s now an AWS vice president. Annapurna’s staff has grown tenfold since the acquisition.
● Microsoft and Google are also working on specialized chips. In part, the trend reflects how different the current crop of tech giants are from the data center operators of the past, which didn’t have the resources to pour hundreds of millions of dollars into designing their own chips.
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