Amazon Moving Forward with Creating Computer Chips

Amazon Moving Forward with Creating Computer Chips

Amazon is known as “the place” to get just about anything you want online for a great price, and fast too. They have been working hard to meet the needs and demands of customers who like speedy deliveries by offering Prime, Prime Now, and their soon-to-be drone delivery service. Amazon has grown to be so much more than just a site where you buy and order stuff. Though they’ve been around for a long time, they know what to do to stay marketable and current for consumers.

As the company is growing in popularity and breaking new grounds, why wouldn’t they take their financial success to create new gadgets? The Wall Street Journal, reported that the large e-commerce company is making plans to go into the semiconductor business by branding and releasing their own computer chips. They also highlighted that Amazon’s growth revenue trails the industry average of 38%. Their revenues increased by 23% from the same quarter of the previous year. Their net income raised by 118% compared to the same quarter a year prior. Their net income growth from the same quarter a year ago exceeded the projections that S&P assumed.

Annapurna Labs is an Israeli subsidiary of the company that Amazon bought last year for $350 million. On Wednesday Annapurna Labs, which is now located in San Jose, California, unleashed the secret to the public and said they’re developing a new line of chips they call Alpine. Gary Szilagyi, the vice president at Annapurna Labs, stated that the company’s Alpine platform-on-chip, as well as their subsystems product lines, provides services providers and OEMs alike a high-performance platform. They want to create hardware that can support growing consumer demands for fast connectivity, innovative services, and many connected devices.

Now that the company got bought by Amazon last January, the startup has shown great growth as evidence of the expanded retail operations. The semiconductor technology that the company is using is based on licensed designs from ARM Holdings. It’s commonly used in a lot of today’s popular products like media streaming devices, Wi-Fi routers, and data centers. This technology is probably the most popular in the smartphone market. Although Intel did make an attempt to crack their share into the segment, they weren’t as successful.

However, the case is different for Amazon as they are trying to take the leap into the computer world, which is primarily dominated by Intel. ARM’s presence in the PC segment has posed a wide threat to the world’s largest chipmaker that currently controls about 99% of shares for server chips. Diane Bryant, business chief of Intel’s data center corporation, stated that ARM’s current share is even below half of a tenth of a percent.

Bryant added that consumers take advantage of that option as a tool for negotiating prices with Intel. However, the Alpine chips being created by the lab are a tad different from the chips that Intel make. It’s because the company is designing them for low-power PCs that make up at the edge of the market. It will mostly be useful for storage and networking purposes rather than the high-end server market that is virtually overtaken by Intel.

The lab says that their technology is already getting utilized in various commercial products created by manufacturers like Netgear, Synology, and Asustek. They say that they also plan on selling their development kits in combination with their chips that could allow their customers to modify what they need in their usage.

As of now, Amazon Web Services is also employing additional engineers to support the acquired startup and add even more to its original capabilities. Amazon has grown to be quite notorious for their acquisitions and for stopping their retail operations as a helpful strategy to spend more time focusing on making technology specifically for internal use. The practice is clear when you remember it was Amazon that purchased Kiva Systems, a robot developer, for the price of $775 million back in 2012. It later halted its robot selling business to retailers.

The same situation might happen in the Annapurna case. Nevertheless, the web retailer has plans to sell their chips to other retailers, which is an outcome that was a shock to many. The e-commerce giant had declined to give any comment on its plans regarding the lab they recently acquired. The Alpine chips are not yet available for purchasing yet through Amazon’s site.

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