Big Tech raises bets on chips


Steve Jobs died more than a decade ago, but his genius still permeates the tech industry. Forget the technology: The Apple co-founder taught fellow executives that whatever’s going on inside the body of a smartphone or under the hood of a computer, the only thing that matters to consumers are products and experiences he loves to use as referred to as “magical”.

So it came as a surprise that Apple’s recent events have given so much importance to the technical prowess of its in-house chips. The company first developed its own processor design for the original iPad more than a decade ago, but its silicon expertise has really come to the fore since 2020, when it began replacing Intel processors in the Mac with its M1 chips.

Since then it has delivered performance gains that have blown away the competition. Two larger versions of the M1 followed, before this week Apple harnessed two of its largest M1 chips to power a new, expensive workstation for video editing professionals.

The chip specs glaze over the eyes of the average consumer, but the processors, now being developed in-house, have become a central part of the ambitions of the biggest tech companies. These include Google’s AI processors, known as TPUs, and Amazon Web Services’ Graviton data center chips. Given the scale at which companies like these operate, their in-house chips could foreshadow a broader industry realignment.

One explanation for the new focus on in-house designs is the amount of chips that the biggest tech companies are consuming. Another reason is that even small improvements in the price/performance equation can result in big gains for the most demanding applications. Google’s TPUs, designed for data-intensive machine learning, have become the king of ASICs – chips designed to do a specific job. Similarly, Tesla’s heavy investment in its AI chips could one day give it an advantage in self-driving cars.

The complex supply chain of the chip industry has evolved to make it easier for companies like these to get started. For Apple, that means using Arm’s designs as the basic building blocks for its chips, while at the other end of the process it leverages TSMC’s most advanced production lines to produce processors with world-leading specifications.

It’s the ability to integrate chip design into their broader technology development plans that gives big tech companies their biggest advantage – while also presenting the biggest challenge for traditional chipmakers.

Integration can take many forms. AWS is able to push new chips from its Annapurna design labs into production as soon as they are ready. Apple says all of its applications run faster on its own chips because it tunes the software and silicon to work together.

Google recently gave a glimpse of the many benefits that come from in-house chip design and spelled it out 10 lessons it has learned from building its TPUs since 2015. These range from economical (it’s the total cost of a system, not just the chips that counts) to highly technical (chips can be optimized for the latest techniques in neural network design). .

With fewer gains to be had from simply shrinking chip feature sizes, Google researchers say the best hope for new leaps in speed and performance lies in the co-design of hardware, software, and neural networks — something that plays to the strength of Companies that do all of these things under one roof.

So far, much of the chip industry’s attention has been on CPUs, or central processing units, that are accelerating the penetration of ARM designs into markets long reserved for Intel’s X86 architecture.

Next to feel the heat could be Nvidia, which has become the world’s most valuable chip company thanks to its GPUs — first designed for video games but now widely used in “accelerated computing” applications like machine learning. Apple this week positively compared its latest M1 chips to Nvidia’s cutting-edge GPUs, or graphics processors. AWS also recently claimed big performance gains over Nvidia with the second generation of its Trainium chip.

Ultimately, the acid test will be to what extent new chips like these will take the big tech companies into new markets. For Apple, that could be self-driving cars and headsets for virtual and augmented reality. These are products that require a big leap in computing power. But if the spirit of Steve Jobs is still alive at Apple’s headquarters, then the chips will be the last thing on anyone’s mind when the day finally comes to show them to the world.

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