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Why Would Facebook Want to Design Its Own Chips?

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May. 10 2018, Updated 8:02 a.m. ET

In-house chip designers

Facebook (FB) may be joining Apple, Amazon (AMZN), and Alphabet’s (GOOGL) Google in the task of designing semiconductor components for its infrastructure systems and hardware products in-house. Citing job listing clues and interviews with sources, a recent Bloomberg report said that Facebook was looking to hire candidates with expertise in building certain types of chips, especially those that could support AI (artificial intelligence) functions.

It appears Facebook is in the process of putting together an in-house team of chip designers. Apple and Google have internal teams that build chips for a variety of their hardware products, and Amazon is reportedly creating custom AI chips for its Alexa voice agent.

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Facebook may be looking to move further into the hardware business

Facebook’s designing chips internally could signal its interest in venturing deeper into the hardware business. Through its Oculus unit, Facebook produces virtual reality gears, which currently run on chips from third-party suppliers such as Qualcomm (QCOM) and Intel (INTC).

In pursuing in-house chip design, Facebook could be looking to minimize its exposure to outside suppliers, or it may have figured out how to build chips in ways that minimize its costs or make its products more efficient in terms of power consumption.

Smart speaker is a likely area of interest

Chips designed internally by Facebook could end up being used in the company’s servers, Oculus headsets, or the smart speaker device that it’s said to be developing.

The global smart speaker market is expected to grow at a rate of 34.4% annually over the next five years to reach $11.8 billion by the end of 2023, according to Research and Markets. Global smart speaker sales generated $2.7 billion in revenue in 2017.

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