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Amazon appears to be preparing to shift away from sourcing processors externally for its consumer electronics, marking a significant change after two decades. Industry analyst Ming-Chi Kuo reports that the company plans to adopt a customer-owned tooling (COT) model for its internally developed chips, similar to its approach with Trainium AI chips. This means Amazon will now design its own processors in-house instead of purchasing from third-party suppliers. The transition is expected to start around 2027 and will impact a broad range of products, including Kindle, Fire TV, Echo, Alexa-enabled devices, Blink cameras, and Ring doorbells.
Amazon has reportedly selected Alchip as its exclusive partner for backend chip design and testing. Once fully implemented, the company anticipates producing approximately 40 million units of these in-house processors annually.
The move comes at a strategic time, driven by financial factors. Amazon’s cash flow over the past year experienced a 95% decline, plunging to about $1.2 billion, partly due to its substantial investments in AI. In a CNBC interview, Panos Panay, Amazon’s hardware head, confirmed that the company already designs complete silicon solutions for products like the Echo Show 8, Echo Show 11, and Fire TV. These chips, including the AZ3 and AZ3 Pro launched in October 2025, are designed to run AI models locally, reducing reliance on cloud processing. While Amazon still utilizes third-party chips where appropriate, Panay emphasized that some key devices are moving toward proprietary silicon, with hints of a broader roadmap that extends beyond smart home products to mobile and portable devices.
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