A mammoth industry hidden by private-label chips
Some of the biggest AI chip designers are famous for very different products
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A GLOBAL surge in demand and subsequent shortage of key industrial components has turned companies like Nvidia Corp, Taiwan Semiconductor Manufacturing Co and ASML Holding into hugely influential names. Hidden from sight, though, is a booming industry of private-label chips that will never go on sale to consumers or corporate customers.
Arm Holdings’ imminent return to public equity markets highlights a 10-year trend that has gone largely unnoticed, but which could upend the way chips are created and sold. Amazon.com, Alphabet, Alibaba Group and Meta Platforms are busy designing, manufacturing and deploying advanced semiconductors for their own use. They all license the core chip technology from Cambridge, England-based Arm, which name-dropped each of them in its prospectus released last week (Aug 21).
With the exception of tiny side hustles in smartphones (Alphabet), virtual reality goggles (Meta), and e-book readers (Amazon), these are Internet companies with no business dabbling in the nuts and bolts of components and computer systems. Yet their competitive edge, and profits, very much depend on ensuring the hardware they install is customised for their own use.
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