Alphabet Inc (GOOG) will manufacture its own chips for smartphones

Alphabet Inc (GOOG) recently announced that after several years of development, it will launch its Pixel 6 and Pixel 6 Pro smartphones this fall on processors of its own production. SoCs are key components of smartphones, and Google’s processor is called Tensor, which refers to the company’s Tensor Processing Unit.

Qualcomm (QCOM) chips will be replaced by Tensor chips in Google smartphones for the first time in 15 years. However, as is traditional in the industry, the transition will not be abrupt and the companies will continue to collaborate on the supply of existing Pixel models.

In a recent statement, Qualcomm executives stated they would continue to work with Google on existing and future products based on the Snapdragon platform.

In the current situation of global shortages of semiconductors, Google’s transition to its own chips will allow it to stop depending on Qualcomm supplies and control the supply of such an important component as a processor.

Google Alphabet’s huge financial capability – the number of profits for 2020 amounted to $40.3 billion – allows it to invest in its own processor production. All technology, time, and money are required for this, and Google has it all.

In addition to having a big cloud computing business, Google is researching artificial intelligence and machine learning technologies that might improve the capabilities of its smartphones. There is only one challenge: making Google’s processor capable of running these technologies.

On Monday, GOOG’s stock finished at $2719.79, up 0.57%. In the past week, GOOG shares have moved down by -2.62%, and they have gained 83.40% over the last 12 months. The company currently has a market value of $1867.04 billion. Its outstanding shares are 686.47 million.