The Age of Custom Chips
The semiconductor industry has entered a phase where off-the-shelf solutions are increasingly insufficient for the demands of modern computing. Companies with the capital and engineering expertise are turning to custom silicon to gain performance, efficiency, and competitive advantage. These custom chips enable engineers to maximize the use of every square millimeter of silicon, ensuring that no space is wasted on unnecessary logic or generic features. This optimization directly translates into lower power consumption and more efficient designs, which is increasingly critical in an era dominated by mobile devices, AI accelerators, and high-performance edge computing.
However, going beyond efficiency, custom silicon also enables engineers to retain sensitive intellectual property in-house. Unlike generic processors, whose designs and capabilities are visible and widely understood, custom chips let companies innovate behind closed doors. This is particularly important for differentiating products in competitive markets, whether through specialized AI accelerators, unique power management techniques, or proprietary sensor interfaces.
The rise of soft cores like ARM and RISC-V have also lowered the barrier to entry for custom silicon, where engineers no longer need to design every transistor from scratch. Instead, they can focus on deployment, system integration, and specialized accelerators, letting the soft core handle general-purpose computation.
Manufacturing infrastructure has also matured to support this custom silicon trend. Foundries such as TSMC have refined processes at 3nm, 2nm, and beyond, enabling even small design changes to deliver measurable performance and efficiency gains. Companies that previously dominated through monolithic design strategies, such as Intel, are now facing significant competition from fabless designers who combine architectural ingenuity with world-class foundry support.
Thus, there is little reason to believe the push for custom silicon will slow. The only real limits faced by engineers are capital, talent, and the ability to justify design costs, but for companies that can afford it, the advantages are decisive.
NVIDIA Developing Custom ARM Chip
NVIDIA is taking the next logical step in the evolution of custom silicon with its development of the N1X and N1 Arm-based processors, in collaboration with MediaTek. These chips are targeted at AI-focused PCs and high-performance laptops, combining low power consumption with performance levels previously reserved for discrete GPUs. Rumors suggest the N1X could match the performance of an RTX 5070 GPU, a claim that, if accurate, would make the chip competitive for high-refresh 1080p and 1440p gaming in compact systems.
The N1X and N1 will be fabricated using TSMC’s 3nm process, demonstrating how far foundry technology has advanced. By leveraging TSMC’s advanced nodes and NVIDIA’s expertise in GPU design, the project aims to deliver a unified CPU-GPU architecture optimized for AI and gaming. Jensen Huang has confirmed that the collaboration with MediaTek is a strategic move to enter the laptop market, positioning NVIDIA not as a complementary vendor but as a direct competitor to Intel, AMD, and Qualcomm.
Performance comparisons suggest the N1X could potentially rival AMD’s Strix Halo APU, which currently sets the benchmark for integrated CPU-GPU performance. Achieving GPU-level performance in a single chip for laptops and compact desktops would address historical limitations in mobile computing, where thermal constraints and power budgets have consistently throttled performance. It is believed that NVIDIA will unveil the N1X at Computex 2026, with next-generation N2X and N2 chips expected in 2027, signaling a long-term strategy to reshape the mobile computing market.
Does this spell trouble for Intel and AMD?
NVIDIA entering the CPU space is a potential game-changer for the industry as a whole. For decades, they have been the go-to company for gaming GPUs, complementing CPUs from Intel and AMD. This traditional partnership allowed gamers flexibility in building systems, but mobile and compact computing platforms have always been constrained by thermal, power, and bandwidth limitations. Even the most advanced GPUs in laptops frequently run below their peak capability due to CPU bottlenecks, memory limitations, and thermal throttling.
By combining high-performance CPUs with GPUs on a single die, NVIDIA could circumvent these limitations, creating a new class of mobile and compact devices. This approach, however, poses a major threat to Intel and AMD in laptops and small desktops, where integrated solutions have historically struggled. But going beyond gaming, these chips could even be highly effective for AI workloads on the edge, offering localized compute power that previously required cloud resources.
For Intel and AMD, this move by NVIDIA demonstrates that the GPU-CPU fusion is quickly no longer becoming optional. NVIDIA’s move shows the growing importance of custom silicon, advanced process nodes, and architecture-specific optimization. The market’s reaction will unfold over the next few years, but the industry’s trajectory is clear: custom, highly integrated designs are becoming the standard, and legacy CPU vendors will need to adapt or risk losing relevance.
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