Amazon Web Services plans to keep designing more of its own semiconductors: CEO

Amazon Web Services CEO Adam Selipsky appeared on Friday's episode of "Mad Money," discussing the cloud giant's plans to design more of its own chips. Subscribe to CNBC PRO for access to investor and analyst insights: https://cnb.cx/2Vtntx6

The newly installed head of Amazon Web Services told CNBC’s Jim Cramer on Friday the cloud computing giant plans design more of its own semiconductors, stressing the cost benefits for clients.

“We have several different chips that we’ve designed so far, with more to come,” AWS CEO Adam Selipsky said in a “Mad Money” interview.

“One of the latest ones is called Graviton2, which actually has 40% better price performance for customers than the comparable x86-based chips,” Selipsky said, referring to the set of instructions that are key to Intel’s processors.

Selipsky’s comments come as the global economy experiences a semiconductor shortage that has snarled a number of industries and underscored the importance chips play in an increasingly digitized world.

While Amazon and other large technology companies have been working on in-house chip design for years, some experts believe the pandemic-related chip crunch only serves to accelerate those ongoing efforts.

The Graviton2 is a data center processor chip, an area of the semiconductor industry in which Intel has a strong position. In March, tech-focused news site The Information reported Amazon also was working on making a networking chip for hardware switches that move data around networks.

Selipsky took over top job at AWS earlier this year after his predecessor, Andy Jassy, was promoted to replace Jeff Bezos as Amazon CEO. Selipsky had been serving as CEO of Tableau, a data-visualization software firm owned by Salesforce.

Before that, Selipsky was vice president for sales, marketing and support at AWS, which is a crucial and highly profitable part of Amazon’s growing empire. Since 2014, it’s consistently contributed more than half of the company’s operating income, despite generating considerably less revenue than the core e-commerce segment.

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