It is only logical that the leading smartphone company (Apple) and the leading AI company (Google) are increasingly designing more of their own silicon which is optimized for each company’s respective products and services.
Tickers mentioned: AAPL, AMZN, AVGO, GOOG, INTC, QCOM, SWKS
Think of the iPhone and Google’s Pixel phone. Every feature, every application, every piece of software, every deep learning model is limited only by the chips that power each use case. The underlying silicon impacts the user experience more so than the application/user layer. The key innovations at Apple (AAPL) and Google (GOOG) are happening at the chip design layer.
It is this in-house chip design effort at Apple, Google and other platform companies that has made companies such as Broadcom (AVGO), Qualcomm (QCOM), Intel (INTC), and Skyworks (SWKS), nervous over the past several years. This is why AVGO is looking to acquire Enterprise Software companies in my view. They are looking to replace lost revenue as is the rest of the chip gaggle as Apple, Google, Amazon (AMZN) and others increasingly design their own chips.
We first became aware of this in-house chip design effort several years ago when Google hired scores of engineers from Broadcom to staff its chip design effort. Today, Apple is recruiting engineers in the San Diego area, home to QCOM. This in-house chip design effort on the part of Apple and Google has been well covered by the media over the past couple of years (we include some recent articles below). We are simply highlighting the fact that it is only logical for AAPL, GOOG and other platform companies to want to design THE key component (the silicon), that powers core product and service offerings.
- Apple’s Not-So-Secret Plan to Take Another Gigantic Bite of the Microchip Market (WSJ, April 2022)
- The Chips That Rebooted the Mac (WSJ, April 2022)
- Apple is reportedly going to make more of its own chips (Bloomberg, December 2021)
- A Look Inside Apple’s Silicon Playbook (Wired, October 2021)
- We Expect Amazon, Apple, Google and Microsoft to Continue to Invest in Proprietary Processing Technology (TEK2day, December 2019)