Amazon.com Inc. (AMZN, Financials) is building custom chips for its key consumer devices as it pushes deeper into on-device artificial intelligence.
Panos Panay, Amazon's head of devices and services, told CNBC the company makes end-to-end silicon for products it ships, including Echo Show 8, Echo Show 11 and Fire TV devices.
Amazon unveiled its AZ3 and AZ3 Pro chips in October. The chips are designed to run AI models directly on devices instead of relying only on cloud processing.
Panay said custom silicon is important for devices where Amazon wants tighter hardware and software control. He also said the company still uses chips from partners such as Qualcomm.
For investors, the move shows Amazon is trying to strengthen its position in AI beyond cloud computing. On-device AI could make Alexa-powered products faster, more private and more useful inside the home.
The strategy also gives Amazon more control over costs and product design, though it may increase research and development spending.
The next catalyst will be new Echo, Fire TV or mobile AI device launches that show how Amazon uses its custom chips in consumer products.