Amazon (AMZN) Plans To Reduce Its Reliance On Broadcom (AVGO) By Developing Its Chips: Amazon Web Services (AWS)

Amazon.com’s (AMZN) cloud computing company Amazon Web Services (AWS), wants to drive independence from semiconductor companies by adding its cloud computing system.


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In an article published Tuesday, The Information said Annapurna Labs, acquired by Amazon in 2015, will be working on chips that will lead to a reduction in AWS’s dependence on Broadcom (AVGO) supplies.

Amazon has been getting Broadcom (AVGO) chips in bulk for many years, which aided decrease the chips’ overall cost compared to buying the chips from Cisco Systems (CSCO) and Juniper Networks (JNPR). Nevertheless, according to media reports, a rift exists between the AVGO stock’s executives, and the AVGOstock has been analyzing other partners ever since.

AWS introduced its chip in 2019 based on new Arm Holdings technology to reduce its dependency on high-value Intel chips (INTC) for its data centers.

In response to the news, Broadcom (AVGO) shares tumbled 3.64% on Tuesday. Broadcom shares are higher by nearly 95% in the past 12 months.

Chipmakers’ competitive position afforded by the global semiconductor shortage has been pointed out in Broadcom’s most recent quarterly results.

Amazon.com’s (AMZN) shares are down 5% since early 2021, closing with a slight high on Wednesday.

Though shares of Amazon are still 58.69% higher than a year ago, the AVGO stock’s growth continues amid the COVID-19 outbreak, according to some analysts. New meaningful incentives might be coming from this growth, analysts added.

It has been reported that the main competitor of AWS is Microsoft’s (MSFT), which uses Intel chips as well for its data centers, mirroring the action of Amazon in developing microprocessors for servers.

The stock of Amazon.com Inc. (AMZN) gained 1.27% to close at $3094.08. Total 3.06 million shares were traded during that time, and this stock’s average trading volume is currently 3.63 million shares per day. When assessing a stock’s current and future price, investors should pay attention to its 52-week high and low price points. Amazon.com Inc. (AMZN) shares are currently -12.90% below their 52-week high mark and 63.78% higher than their 52-week low mark.

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