Amazon acquires chip maker for cloud services business

Amazon is reportedly acquiring an Israel-based chip maker as part of AWS, which could mean the firm plans to design its own hardware down to the chips

Amazon is reportedly acquiring an Israel-based chip maker as part of Amazon Web Services (AWS), which could mean the firm plans to design its own hardware right down to the chips.

The IT giant is to pay more than $350m for Annapurna Labs, which makes chips that enable fast data traffic for computing and storage servers, according to reports. 

Annapurna labs is still operating in stealth mode and was previously invested in by UK chip maker ARM. In 2014, Amazon recruited a number of people from failed ARM chip maker startup Calxeda.

Amazon is known for designing its own networking, storage and server equipment, but the acquisition could mean it will soon feature its own server chips as well, with custom chip architectures potentially improving AWS performance.

Increasing the speed of data traffic and performance for cloud services providers is a major challenge as customers desire near real-time access to data.

Analysis from CloudHarmony showed AWS experienced fewer than five hours downtime in 2014 in total for its storage services – Elastic Cloud Computing and Simple Storage Service – with 35 outages. In contrast, Microsoft Azure Object Storage was down for 10.89 hours and Azure Virtual Machines experienced 42.94 hours of downtime globally in 2014. Microsoft Azure had 241 outages in total.

AWS could also use the hardware to lower its own costs and pass on savings to customers. This will help the firm amid a cut-throat price war between the main cloud service providers.

AWS is renowned for reducing prices on a regular basis as volumes increase, but a report from RBC capital – reported by website Cloud Tweaks – revealed cuts being made across the sector.

The big cloud suppliers – including AWS, Microsoft, Google and IBM – are locked in a battle to the bottom on price, which is unlikely to let up any time soon.

According to the report, AWS's price per gigabyte of RAM was $42 in October 2013 and fell to $25 in December 2014. In the same period, Google’s price dropped from $52 per gigabyte of RAM to $32; IBM SoftLayer reduced its price from $55 to $32; and Microsoft Azure fell from $46 to $34.

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