Why Tech Giants are Rushing to develop their own Chips?

According to company announcements and media reports, big tech companies like Apple, Amazon, Facebook, Tesla and Baidu are all bringing certain aspects of in-house chip development.
Syed Alam, global semiconductor lead at Accenture, told CNBC that “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,” Alam added.
Russ Shaw, a former non-executive director at U.K.-based Dialog Semiconductor, also told the 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 added.
Glenn O’Donnell, research director at analyst firm Forrester said that the recent global chip shortage is another reason why big tech firms are thinking twice about where they get their chips from. “The pandemic threw a big wrench in these supply chains, which accelerated efforts to do their own chips and many already felt limited in their innovation pace being locked into chipmaker timelines,” O’Donnell added.


At this stage, none of the tech giants are looking to do all the chip development themselves. Since setting up an advanced chip factory, or foundry, like TSMC’s in Taiwan, costs around $10 billion and takes several years according to CNBC news.
“Even Google and Apple are reticent to build these,” O’Donnell said. “They’ll go to TSMC or even Intel to build their chips.”
According to the CNBC, O’Donnell said that there’s a shortage of people in Silicon Valley with the skills required to design high end-processors. “Silicon Valley put so much emphasis on software over the past few decades that hardware engineering was seen as a bit of an anachronism,” he said.
“It became ‘uncool’ to do hardware,” O’Donnell said. “Despite its name, Silicon Valley now employs relatively few real silicon engineers.”