Google chips plan latest Big Tech move into semiconductors – Tech Monitor
Google is developing its own central processors for its computers and smartphones – the latest signal that Big Tech companies are intent on making their own chips.
By Laurie Clarke
Google is developing its own central processors for its notebook and tablet computers, following August’s announcement that its Pixel smartphones will be powered by semiconductors developed in-house. It is the latest Big Tech company to invest in custom silicon, and this move away from third-party designs could have big ramifications for the chip industry.
Google is developing its own semiconductors. (Photo by Sean Gallup/Getty Images)
Google plans to roll out the CPUs for laptops and tablets in around 2023, according to Nikkei Asia. In its push for in-house chip design for consumer products, Google has likely taken inspiration from Apple, which started using its own iPhone and iPad processors, based on the Arm architecture, in 2010. Apple also announced last year that it would replace Intel CPUs in Mac computers and laptops with its own Arm-based designs. Google’s chips are also built from blueprints provided by the UK chip design giant, which has corned the market for mobile processors and is now increasingly popular for computing chips.
“Designing leading-edge chips is an expensive game, but Google is one of the world’s largest semiconductor users, so it can afford to play,” says Linley Gwennap, principal analyst at The Linley Group. “This approach enables these companies to customise their chips with special capabilities. For example, Google builds its own AI chips, including a small one for the Pixel 6 phone, that are optimised for the AI models that Google itself develops.”
Google has already developed in-house chips for its data centres, but is now ramping up its efforts in relation to its consumer products. Other large chip users, such as Amazon, Huawei and Microsoft, also design some of their own chips. Amazon has developed chips for its data centre servers, and custom AI chips for its cloud services. In 2019, Facebook announced it would develop AI chips for its data centres too. Microsoft has designed a programmable chip to handle AI and another that increases security. It is also currently working on a central processor, according to Bloomberg.
“Google’s plans are what we have been forecasting for several years now, namely a return to the vertical integration OEM [Original Equipment Manufacturer] model of old (back in the very early [semiconductor] days),” says Malcolm Penn, CEO of Future Horizons. “Fundamentally it’s driven by the fact that custom [chips] always offer the best system performance so, by Google designing its own processors, these will work better [in terms of] performance and efficiency, than a standard part, no matter how good the standard part is.”
The reason the semiconductor business went horizontal in the first place, says Penn, is because “vertically integrated OEMs had to be full-blown chip companies, fabricating the parts as well.” He adds: “With the fabless ecosystem now so well developed, driven primarily by TSMC and the EDA [electronic design automation] software vendors, designing your own [chips] is almost as easy as designing your own T-shirt on Etsy. It’s also very affordable.”
Other major tech companies such as Oppo, Vivo and Xiaomi are adopting the same trend for self-developed chips for “better software and hardware integration, less product spec restriction from original [chip] suppliers, and flexible R&D resources and direct response to the market,” says Eric Tseng, CEO of Isaiah Research. “With that, these tech companies may be more competitive and differentiated from other competitors in the market.”
In-house chip designs should allow companies to better find and address “problems in both its hardware and its software and produce better products for its customers,” says Gwennap.
Penn says the impact on the semiconductor industry will be profound: “These OEMs will increasingly design their own (typically very complex, leading-edge) system-level [chips] and then go direct to the foundry to have the parts made,” he says. “They will in effect simply bypass the traditional [chip] vendors and a massive part of the traditional [semiconductor] market will go captive, shrinking the size of the remaining market pie.”
The winners of the trend are likely to be Arm, as well as TSMC and Samsung, the only two companies in the world capable of manufacturing leading-edge chips at scale. In anticipation of demand this year, TMSC raised eyebrows when it increased its planned capital spending from $17.2bn up to $28bn.
The losers of the trend are likely to be established chip designers, including AMD, Nvidia and Intel. This year, Intel announced its decision to outsource some of its production to TSMC due to delays in rolling out its own latest chip production technologies, though its longer-term plan involves re-establishing its leadership in chip production. Nvidia, meanwhile, hopes that the planned purchase of Arm will help strengthen its position in the market, but regulatory challenges around the world have put a question market over this deal.
