Meta to Manufacture Its Own AI Chip Starting September

Meta Platforms plans to begin manufacturing its own data-center AI chip in September, according to an internal memo reviewed by Reuters. The move sent Meta shares up approximately 6% on Friday as investors welcomed the company's strategy to extract more value from its massive AI infrastructure budget.

The chip, code-named Iris, was developed with assistance from Broadcom and will be manufactured by Taiwan Semiconductor Manufacturing. Meta expects to spend up to $145 billion on AI infrastructure this year, making custom silicon a critical tool for maximizing computing power per dollar invested.

Why it matters

Meta's chip program signals a strategic shift in the AI infrastructure landscape. While the company will continue purchasing GPUs from Nvidia and AMD, every custom chip deployed represents potential pricing pressure on Nvidia's dominant position. For chip investors, this demonstrates how even AI's biggest spenders are building credible paths toward reduced dependence on any single supplier.

Aggressive development timeline

The Iris chip is part of a four-generation family Meta is designing in-house, and the program appears further along than many market observers anticipated. Testing took approximately six weeks and revealed no major issues, according to the memo.

Meta reportedly plans to launch a new chip roughly every six months through 2027—double the industry's typical annual cadence. These chips will augment rather than replace the GPUs Meta purchases from Nvidia and AMD.

The infrastructure these chips will support is substantial. Meta plans to bring about 7 gigawatts of computing capacity online this year and double its total to 14 gigawatts by 2027, Reuters reported.

Core business remains strong

Meta's ambitious infrastructure spending is backed by robust financial performance. First-quarter revenue climbed 33% year-over-year to $56.3 billion, accelerating from 24% growth in the fourth quarter of 2025 and 22% growth for the full year.

Profitability metrics also impressed. The company posted a 41% operating margin for the period, while earnings per share of $10.44 grew 62% year-over-year. That figure included a $3.13 per share boost from an $8.03 billion one-time tax benefit, but the underlying growth trajectory remains exceptional for a company of Meta's scale.

Implications for the chip ecosystem

The development carries different messages for various players in the semiconductor industry. Nvidia's chips remain central to Meta's computing architecture, but the custom silicon program creates a hedge against supply constraints and pricing power. Meanwhile, Broadcom gains additional design partnership revenue, and TSMC secures another major manufacturing customer.

For Meta shareholders, the chip program represents a tangible effort to control costs in what has been the company's largest area of capital expenditure concern. The ability to design and deploy custom silicon at this pace suggests Meta's engineering capabilities extend well beyond social media software.

These details were first reported by Reuters based on an internal company memo.