Amazon's second-gen ARM-based chips are coming to its cloud business

Is AWS looking to lessen its reliance on Intel and AMD?

In a nutshell: Amazon Web Services (AWS) is a big earner for Jeff Bezos’ company, so it stands to reason that it's receiving heavy investment. Soon, AWS will be getting a second-generation data center processor chip that’s more powerful than its predecessor.

Amazon’s cloud computing unit designed the ARM-based processor, which, as noted by Reuters, will be 20 percent faster than Graviton, the company’s first-gen ARM chip that was created as a low-cost option.

With Amazon designing the processor itself using ARM technology, it could see the company relying less on Intel and AMD for server chips.

British chip designer ARM was purchased by Japanese multinational telecoms corporation Softbank for around $31 billion in 2016. The semiconductor designer has been making a name for itself in the server market in recent times—an industry dominated by Intel, which has around 90 percent share, and AMD.

AWS, which rents out servers to businesses, is expected to bring in $34.9 billion in sales this year.

While Amazon’s first ARM chip didn’t seem to have an impact on Intel’s data center business, Bernstein analyst Stacy Rasgon told Reuters that big tech companies have the resources to make more powerful ARM-based chips, though Amazon’s new processor isn’t expected to match Intel’s Cascade Lake or AMD’s Rome processors.

“ARM by itself I’m not worried about, but Arm in the hands of an Amazon or a Google who could potentially invest in it, that becomes potentially more problematic” for Intel, Rasgon said.

There’s been no official announcement about the chip from Amazon, but it’s expected to use ARM’s Neoverse N1 technology and have 32 cores, double what’s found in the Graviton.