AWS, Amazon’s cloud computing division, has designed a more powerful second-generation data center processor chip, people familiar with the matter said. It is yet another sign that Amazon is investing heavily in custom chips for its fast-growing business. AWS’ new data center chips use softbank group ARM technology, at least 20 percent faster than the first-generation ARM chip, Graviton, the sources said. Graviton, released last year, is less expensive for simpler computing tasks.
If AWS’ efforts on chip development are successful, it will help Amazon reduce its reliance on Intel and AMD server chips.
In cloud computing, businesses rent servers from Amazon instead of running autonomous data centers. Analysts expect Amazon’s revenue to reach $34.9 billion this year, according to Lufu IBES.
Cloud computing has become an important business for data center chipmakers. Intel controls more than 90 percent of the server chip market, and AMD accounts for almost the rest of the market. Last year, Intel’s data center division contributed nearly half of the company’s operating profit. Most server chips are used for cloud computing. In 2018, nearly 65 percent of Intel’s data center chip revenue came from cloud computing and communications service providers, Intel executives said.
Tech giants challenge Intel dominance with custom chips
Chip designers using ARM technology want to challenge Intel’s dominance. At present, ARM chips dominate the mobile phone field. However, several companies are trying to make ARM chips suitable for data centers, including start-ups run by former Intel and Apple executives.
Stacy Rasgon, an analyst at Bernstein, an investment bank, points out that Amazon’s first ARM chip does not appear to have had an impact on Intel’s data center business, which has continued to grow over the past year. But he says tech giants, which spend billions of dollars a year on Intel and AMD and are less selective, have the resources to develop stronger ARM chips.
“If it’s just ARM, I’m not worried, but if Amazon or Google invest in ARM technology and master these technologies, it could be more problematic for Intel.” Rasgon said.
Amazon’s efforts to develop ARM chips appear to be making progress, the sources said, as the new chip’s speed boost sends a signal that Amazon is seriously investing in ARM chips. But sources also point out that Amazon’s new chips are not as powerful as Intel Cascade Lake or AMD’s Rome server chips.
Although performance is worse, ARM chips are cheaper and consume less power than Intel’s high-end chips. Intel’s strongest server chips cost several thousand dollars, but ARM server chips cost less than $1,000.
In a data center with tens of thousands of servers, chip buyers often focus on a number of factors: speed, chip size, power consumption, and cooling costs, or “total cost of ownership.” That’s where ARM chip providers hope to one day compete with Intel.
New ARM technology
Amazon’s first-generation Gtonravi chips used ARM’s older Cortex A72 architecture technology. People familiar with the situation said the new chip is expected to use newer ARM technology, most likely the Neoverse N1 architecture. In another source, the new chip is expected to have at least 32 cores, up from 16 cores on the Graviton chip.
The new chip will also use an architecture technology called “fabric”, which allows it to collaborate with other chips to speed up tasks such as image recognition.
To take advantage of the new chip, cloud customers are likely to need to use software developed specifically for ARM chips. Arm chips have relatively little software available compared to the software used by Intel and AMD chips. “Hardware is only part of the calculation. Another source said.
An Amazon spokesman declined to comment on future products or services. ARM declined to comment.