Amazon’s (NASDAQ:AMZN) cloud server unit Amazon Web Services has designed a new and powerful data center processor chips. This is the latest move by the company to invest in custom silicon for its cloud services business.
New AWS server chip 20% faster than previous chips
The company announced last year the launch of the ARM-based processor known as Graviton. The low-cost processor is optimized for enhanced performance in computing. According to people familiar with the matter, the latest processor chips are almost 20% faster compared to the first-generation ARM chips.
The new AWS chip employs technology from British company ARM Holdings owned by Softbank Group. The chips will use the Neoverse NI tech and will have around 32 cores, which are almost double ARM’s previous chips. The company is looking to compete on the market that is currently dominated by Advanced Micro Devices (NASDAQ: AMD) and Intel Corp (NASDAQ: INTC). Intel has been dominating the server chips market, but in recent times ARM has emerged as a serious contender in the server chips space.
If the efforts of Amazon Web services succeed in producing the server chips, that could be a huge milestone. As a result, this could limit the overreliance of the AWS unit on server chips from Intel and Advanced Micro Devices. When reached for comment regarding future services and products, an Amazon spokesperson declined to comment on the matter.
Cloud computing segment has massive potential
The cloud business is a very big business for Amazon, and businesses rent the company’s servers instead of operating their data centers. According to analysts, the cloud business could bring amazon around $34.9 billion in sales this year.
Data center server chip makers such as Intel and AMD generate significant revenue from the cloud computing business. Currently, Intel controls almost 90 of the market, while AMD controls the rest. Last year the data center segment generated around half of Intel’s overall operating profit.
Equally, almost all the server chips manufactured go-to cloud computing services. Last year around 65% of Intel’s server chip sales were from communication and cloud service providers.