Google to quit dependency on traditional chipmakers

The company is bolstering in-house chip design by poaching Qualcomm, Intel, NVIDIA engineers

Google is reportedly stepping up its efforts to design its own in-house smartphone and data center chips by building a new team of engineers dedicated to the project in Bengaluru, an up-and-coming semiconductor site in the capital of the south Indian state of Karnataka. According to Reuters, over the past several months, Google has hired a bunch of chip engeneers to join the new 'gChips division' and currently the team includes at least 16 engineers and four recruiters, all poached from companies like Broadcom, Intel, NVIDIA, and Qualcomm. The team, however is expected to continue to increase in headcount.

This is not an entirely new venture for Google since for close to a decade, Apple and Google have been steadily bringing more chip design in-house, starting with Apple’s A4 processor for the iPhone and, in recent years, including dedicated chips for graphics and on-device image and artificial intelligence processing. Google also designs its own AI training and inference chips for data centers, called Tensor Processing Units.

Yet, the move is the latest sign that the tech industry’s biggest players are trying to cut costs and increase margins by ridding themselves of reliance on the traditional chip business, namely Intel and Qualcomm. That in result has seriously threatened the businesses of some of Silicon Valley’s oldest and most venerated companies.

Particularly harming for chipmakers is Apple’s fast-deteriorating relationship with Qualcomm over the use of the latter’s modem chips in the iPhone, which is now the source of a convoluted series of lawsuits. Apple initially sued Qualcomm in early 2017 for alleged anti-competitive practices related to how much money it was charing the iPhone maker for its modems, a significant component for accessing the internet on a smartphone. Qualcomm countersued, leading to an aggressive escalation between the two companies that’s resulted in Apple ditching Qualcomm to exclusively use Intel modems in last year’s iPhones, an attempted ban on US sales of certain iPhones, and Apple’s reported plans to ditch the chipmakers entirely and develop its own modems in-house.

Now, despite using Intel modems going forward and likely to power the first 5G-capable iPhones next year, it looks like Apple may even eventually stopping using Intel to supply components like the processors for Mac computers, a new version of which Apple is said to be developing internally as well.

And now, if Google's chip efforts go well and its team expands into the hundreds, Google may also relieve itself of Qualcomm’s Snapdragon line in the future and overall quit its dependency on third-party companies.

All that said, it’s looking like the biggest device and software makers in the industry are only going to continue pushing away the chip suppliers. For Google, which has expanded its device lineup in recent years to include smart speakers and all manner of other AI-controlled gadgets, custom chip design is paramount to ensure it can tightly integrate hardware and software features.

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