Amazon Weighs $50B External Chip Business as Memory Costs Surge 50%
Amazon’s AWS division generates a $20B annualized run rate from custom Graviton and Trainium chips, and management plans a standalone chip business targeting $50B in external sales. Rising memory-chip prices—up 50% this year—are likely driving higher AI infrastructure capex as part of a projected $700B big-tech investment wave.
1. AI Investment Surge
Amazon joined Google, Microsoft and Meta in logging a record $130.6 billion of AI infrastructure spending in Q1 2026, positioning AWS to expand investments as total big-tech AI outlays near $700 billion by year-end.
2. Rising Component Costs
Soaring memory-chip prices, up 50% year-to-date, are straining budgets across big tech and likely fueling higher AI infrastructure capex for AWS to maintain its computing capacity.
3. AWS Chip Business Outlook
AWS’s custom Graviton and Trainium processors underpin a $20 billion annualized revenue run rate, demonstrating Amazon’s growing in-house semiconductor capabilities for cloud services.
4. Capacity and Launch Timing
Amazon plans to scale chip production beyond internal AWS needs before offering its standalone Graviton and Trainium products to third parties, targeting up to $50 billion in new external sales.