Why More Businesses Will be Creating Their Own Chips in 2022

Apple, Amazon, Facebook, Tesla, Ford, General Motors, and a growing number of other businesses are turning away from semiconductor firms and bringing chip development in-house.

“This past year, many of the world’s largest technology corporations struggled to procure enough supply of semiconductor parts to keep up with the ever-growing demand for products,” observes Mark Bollinger, chief globalization officer at Smith, an independent global distributor of semiconductors and electronic components. Understandably, many do not want to find themselves in this situation again.

There are many reasons why a business outside of the semiconductor industry may decide to create its own chips, including supply chain resilience and control over intellectual property. “Companies are discovering that the right balance of hardware and software can be differentiating, which usually means they can’t use the same commercial solution being used by everyone else in their industry segment,” explains Shiv Tasker, global head, semiconductors, and electronics, for engineering consulting firm Capgemini Engineering. “Organizations want to emulate their market leaders who, by designing their own chips, and more of the chip software, are able to control more of their products and brand’s differentiation, user experience, and supply chain -- often giving them a huge margin advantage over their competition.”

A Change of Heart

After decades of viewing chips as something to be acquired from an external semiconductor manufacturer, most businesses in a wide cross-section of fields have never even considered the possibility of designing their own chips, either as a need or an opportunity. “Many companies have not thought about innovation at the chip level as a critical success factor or even a value generator for their own business,” Tasker says. Today, after viewing multiple success stories of in-house chip innovation spanning a wide array of industries, companies are discovering the business value inherent in designing their own chips. “When used to differentiate products or services, create super consumer experiences, or improve productivity, these chip-level innovations can offer a sustained competitive advantage that can far outweigh the upfront investment and commitment required,” he notes.

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