Amazon.com Inc. (NASDAQ:AMZN) is ramping up its efforts to produce custom chips for its key consumer devices, as revealed by the company’s top hardware executive.

On Wednesday, Panos Panay, the head of devices and services at Amazon, shared the company’s semiconductor strategy in an interview with CNBC’s “The Tech Download” podcast. Panay revealed that Amazon is manufacturing its own end-to-end silicon for devices it ships, including the Echo Show 8, Echo Show 11, and Fire TV.

Last October, Amazon unveiled the AZ3 and AZ3 Pro chips, designed to run AI models directly on devices instead of relying on the cloud. Many device makers consider this approach faster and more secure. Panay confirmed that despite the focus on in-house chip production, Amazon continues to use chips from other companies like Qualcomm Inc. (NASDAQ:QCOM).

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Amazon Builds Its AI Ecosystem

Amazon’s intensified focus on in-house chip production aligns with its recent initiatives to enhance its AI capabilities. Amazon has rolled out Alexa+ across the U.S., an AI-powered upgrade to its voice assistant that can handle more complex tasks, learn user preferences, and seamlessly connect devices across the company’s Ring, Echo, and Fire TV ecosystem.

In May, Amazon launched Alexa for Shopping, a new AI shopping bot that revolutionizes Amazon’s search bar into a Q&A engine. This tool, which merges the functionalities of Rufus and Alexa+, uses user shopping data to craft a personalized AI shopping assistant.

Last month, Bank of America reiterated its Buy rating on Amazon, citing the potential of Alexa AI to be the real winner of the Prime Day event. Analysts view the event as a strategic opportunity for Amazon to increase awareness and engagement with Alexa for Shopping, its AI-powered shopping assistant.

The Future of AI Devices

Panay said advances in AI could move computing beyond traditional apps and screens toward more natural, context-aware conversations, though he noted the future form factor for AI devices remains uncertain.

Last month, Qualcomm CEO Cristiano Amon said is working on more than 40 AI-powered devices—including smart glasses, earbuds, jewelry, pins, and watches—designed to act as personal AI assistants and potentially reshape the consumer hardware market.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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