Amazon plans in-house chips for consumer devices from 2027

Amazon is reportedly preparing to replace third-party processors with custom-designed chips across its consumer hardware portfolio, a move aimed at reducing supplier dependence, supporting AI ambitions and improving long-term cost efficiency.

Amazon is reportedly preparing a major overhaul of its consumer hardware strategy by transitioning from third-party processors to custom-designed chips across its range of connected devices. According to supply chain analyst Ming-Chi Kuo, the phased transition is expected to begin in 2027 and would represent the company's most significant change in processor sourcing in nearly two decades.

The reported initiative is expected to cover a wide range of Amazon products, including Kindle e-readers, Fire TV streaming devices, Echo smart speakers and displays, Alexa-powered hardware, Blink security cameras and Ring video doorbells. By designing its own processors, Amazon is expected to reduce its reliance on external chip suppliers while gaining greater control over product development and performance.

Custom silicon strategy expands beyond AI

According to Kuo, Amazon plans to adopt a Customer-Owned Tooling (COT) model for its custom processors, an approach already used for its Titanium AI chips. Under this model, Amazon would retain ownership of chip designs while outsourcing manufacturing to semiconductor partners, allowing it to develop proprietary silicon without operating its own fabrication facilities.

The analyst also claimed that Amazon has selected Alchip as its exclusive backend partner for chip design support and testing. Once the transition is fully implemented, annual shipments of Amazon-designed processors could reach approximately 40 million units, reflecting the scale of the company's consumer hardware business.

The reported move builds on Amazon's ongoing investments in proprietary silicon, which have so far focused on artificial intelligence and cloud computing workloads. Expanding the strategy to consumer electronics is expected to give the company greater flexibility in integrating AI features while optimising hardware and software performance across its device ecosystem.

AI investments and cost pressures shape strategy

The reported shift comes as Amazon continues to increase spending on artificial intelligence infrastructure. According to Kuo, the company's free cash flow for the 12 months ending in the first quarter of 2026 declined sharply as investments in AI accelerated, prompting a broader focus on long-term cost optimisation.

Amazon's devices and services chief, Panos Panay, recently confirmed that the company already develops custom silicon for products such as the Echo Show and Fire TV lineup. While he did not comment on Kuo's report, Panay said Amazon intends to expand its in-house chip development efforts to support future generations of AI-enabled devices.

He also hinted at a broader product roadmap that extends beyond smart home devices, suggesting the company is working on new portable hardware categories. If the reported plans move forward, Amazon would join a growing list of technology companies adopting proprietary silicon to improve performance, reduce dependence on third-party suppliers and strengthen control over their hardware ecosystems.