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Amazon gobbles chips firm Annapurna to speed up cloudy data centers

Stealth firm could solve networking costs conundrum for AWS

Amazon has agreed to buy a secretive Israeli chipmaker in an apparent bid to build new custom tech for its massive data centers.

Israeli financial newspaper Calcalist was the first to report that Bezos & Co had snapped up Yoqneam, Israel–based Annapurna Labs, and Amazon later confirmed the purchase to the Wall Street Journal and other news outlets.

What Amazon is hoping to get out of the gobble isn't totally clear, as Annapurna has so far been tight-lipped about what exactly it's working on.

We can deduce a few things from the company's pedigree, though. It was founded around four years ago by Avidor Willenz, who in 1994 also founded Galileo Technology, a maker of networking chips and transceivers.

Galileo may not have earned much recognition outside the semiconductor industry, but it certainly caught the attention of ARM chipmaker Marvell, which acquired it in 2000 for an estimated $2.7bn in stock.

So while Annapurna hasn't disclosed anything publicly, it's a safe bet that its products are on similar lines to Galileo's – and indeed, anonymous sources tell the WSJ that the Israeli firm is working on midrange networking chips that deliver high performance combined with low power consumption.

It also makes a lot more sense for Amazon to want to acquire a networking company than, say, one that designs server CPUs.

At the AWS re:Invent conference in Las Vegas in November, Amazon data center mastermind James Hamilton told El Reg that although Amazon regularly evaluates ARM-based servers, it feels more confident continuing with Intel as its main processor partner.

Amazon buys server chips in such volume that Intel is even willing to develop custom versions of its chips tailored just for the AWS data centers, Hamilton said – as we've seen with the launch of Amazon's latest compute-optimized Elastic Compute Cloud (EC2) machine instances.

But Amazon is so fastidious about its data center engineering that it's planning to go far beyond custom CPUs. Eventually all of Amazon's hardware will be custom kit built by original design manufacturers (ODMs) – and networking is Job One.

"Networking is a red-alert situation for us, right now, industry wide," Hamilton said in a talk at AWS re:Invent. "The cost of networking is escalating relative to the cost of all other equipment. It's anti-Moore. All of our gear is going down in cost, we're dropping prices all the time, and networking is going the wrong way. That's a big problem."

How Annapurna fits into Amazon's plans isn't known, but if it's got the tech that the cloud kingpin needs, Amazon may have got it at a bargain. Details of the deal were not disclosed, but sources suggest it will cost Amazon somewhere in the range of $350m to $375m. ®

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