As chip scarcity highlights the news, tech giants have started to route massive resources to Israel to pioneer the next wave of global chip development. Intel, which has been part of the Israeli chip R&D scene for many years, and more recent NVIDIA, which leans on its acquisition of Israeli company Mellanox, are soon to be joined by Google and Microsoft - who have also announced plans to establish chip R&D factions in Israel. According to recent reports, Amazon’s new chip will also be developed at the company’s Israeli R&D center.

The $350M acquisition to birth a new chip

Based on The Information’s report, Amazon plans on independently developing a new networking chip for its server farms - both for company use and as part of AWS cloud services. The new networking chip will be developed by Amazon’s Israeli division, which is based on the 2015 acquisition of Israeli startup Annapurna Labs for a reported $350 million.

Amazon’s planned Israeli developed chip will help solve problems clogging its own network infrastructure, as well as accelerate network traffic. The report noted that, currently, Amazon develops switches for its server farms in-house. However, the chips powering the switches are the product of Broadcom. This move aims to cut out the “middle man”, in this case Broadcom, in order to try and improve the way it works and provides service. Amazon will be able to leverage the new chip’s capabilities to offer customers a wide range of processing skills, including ML programming, which was previously based on Intel’s GAUDI chips.

This is not the first time that Amazon has gone rogue with its chip development. Amazon had previously developed the chip for its smart speakers in cooperation with Taiwanese chip giant MediaTek, even launching a co-developed ML processing chip called Trainium this last December. In addition, the Annapurna Labs division had developed the Graviton and Inferentia series.

The cloud & software giants now make their own hardware

The news regarding the Israeli developed chip coincides with Amazon’s massive recruitment in the country, which announced 6 months ago that it plans on adding 150 new employees to its Israeli R&D roster - with a focus on chip designers.

As we mentioned, the trust in Israeli chip R&D is not pioneered only by Amazon - the company joins a list of leading players vested in Israel. Just last week, we reported that Google is venturing into chip development, tapping a former Intel exec (Uri Frank) to head its new Israeli R&D center. Adding the Amazon and Google news to other chip giants choosing Israeli R&D, it becomes impossible to ignore Israel as a growing leader in the global chip industry.

At the same time, we are seeing more and more startups grow out of this new global trust in Israeli chip R&D, such as with new startup Xsight Labs, a switch developer for server farms, which coincidentally was founded by the same entrepreneur who founded Annapurna Labs - Avigdor Willenz.