Amazon Web Services plans to design more of its own semiconductors: CEO

The newly installed head of Amazon Web Services told CNBC’s Jim Cramer on Friday that the cloud computing giant plans to design more of its own semiconductors, focusing on the cost benefits for customers.

“We have several chips that we’ve designed so far, with more to come,” AWS CEO Adam Selipsky said in a “Mad Money” interview.

“One of the newest is called Graviton2, which actually has 40% better price performance for customers than the comparable x86-based chips,” Selipsky said, referring to the set of instructions essential to Intel’s processors.

Selipsky’s comments come at a time when the global economy is experiencing a semiconductor shortage that has snapped a number of industries and underscores the importance chips play in an increasingly digitized world.

While Amazon and other major tech companies have been working on internal chip design for years, some experts believe the pandemic-related chip crisis only serves to accelerate those ongoing efforts.

The Graviton2 is a data center processor chip, part of the semiconductor industry in which Intel has a strong position. In March, the tech-focused news site The Information reported that Amazon was also working on creating a network chip for hardware switches that move data across networks.

Selipsky took over the top position at AWS earlier this year after his predecessor, Andy Jassy, ​​was promoted to replace Jeff Bezos as Amazon CEO. Selipsky was CEO of Tableau, a data visualization software company owned by Salesforce.

Prior to that, Selipsky was vice president of sales, marketing and support at AWS, a pivotal and highly profitable part of Amazon’s growing empire. Since 2014, it has consistently contributed more than half of its operating income, despite generating significantly less revenue than its core e-commerce segment.

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