Rivian has a huge interest in being the outsourcer for legacy automakers. They’re not able to sell $100k cars enough and even with the promised R2, they probably will only be a small-ish player in the EV market. Their CEO recognizes how crazy good Chinese EVs are and currently they’re not even a competitor for Tesla.

But, VW is willing to pay $5B for their software platform. I think they want to extend that to being able to sell custom chips and “AI” capabilities, whatever that means.

I was just in a discussion on this very topic. It's the build vs buy equation applied to silicon. Early in the tech boom the entire silicon stack was proprietary and required a lot of time and investment to train up people who could design the circuitry, we got our first "ASICS" which was basically a bunch of circuitry on a die and you then added your own metal layer so it was like having a bunch of components glued to a board and you could "customize" it by putting wires between the parts. Then we had fabs that needed more wafer starts so they started doing other peoples designs which required they standardize their cells and provide integration services (you brought a design and they mapped it to their standard cells and process). And as the density kept going up they kept having loots of free space they needed to fill up. The 'fabless' chip companies continued to invest in making new parts until the pipeline was pretty smooth. And at that point the level of training you needed a the origin to get it into silicon dropped to nearly zero, you just needed the designs. And into that space people who were neither 'chip' companies, nor were they 'fabless' OEMs, realized they could get their integration needs met by asking a company to make them a chip that did exactly what they wanted.

One the business side, the economics are fabulous, your competitors can't "clone" your product if they don't have your special sauce components. So in many ways it becomes a strategic advantage to maintaining your market position.

But all of that because the all up cost to go from specification to parts meeting the specification dropped into the range where you could build special parts and still price at the market for your finished product.

A really interesting illustration is to look at disk drive controller boards from the Shugart Associates ST-506 (5MB) drive, to Seagate's current offerings. It is illustrative because disk drives are a product that has been ruthlessly economized because of low margins. The ST-506 is all TTL logic and standard analog parts, and yet current products have semiconductor parts that are made exactly to Seagate's design specs and aren't sold to anyone else.

So to answer your question; apparently the economics work out. The costs associated with designing, testing, and packaging your own silicon appears to be cost effective even on products with exceptionally tight margins, it is likely a clear winner on a product that enjoys the margins that electric vehicles offer.

I would wager that's because there isn't a lot of existing silicon that fits the bill. What COTS equipment is there that has all the CPU/Tensor horsepower these systems need... AND is reasonably power efficient AND is rated for a vehicle (wild temp extremes like -20F to 150F+, constant vibration, slams and impacts... and will keep working for 15 years).

Yea, Tesla has some. But they aren't sharing their secret sauce. You can't just throw a desktop computer in a car and expect it to survive for the duration. Ford et all aren't anywhere close to having "premium silicon".

So you're only option right now is to build your own. And hope maybe that you can sell/license your designs to others later and make bucks.

I share your skepticism. This feels like an attempt to tap the trainloads of money piling into "AI", for a company that is in pretty desperate need of more cash to stay alive.

In a vacuum there are potentially some advantages to doing your own silicon, especially if your goal is to sell the platform to other automakers as an OEM.

But custom silicon is pricey as hell (if you're doing anything non-trivial, at least), and the payoffs have a long lead time. For a company that's bleeding cash aggressively, with a short runway, to engage in this seems iffy. This sort of move makes a lot more sense if Rivian was an established maker that's cash-flow positive and is looking to cement their long-term lead with free cash flow. Buuuuut they aren't that.

I have the same question. It makes sense that they might need bespoke software, but how could they possibly be more efficient at creating chips than an AMD/Nvidia?

Possibly. Realistically this is replacing the expensive category of FPGA (Zynqs or similar with strong hardware CPU cores), this means they get all the peripherals they desire in hardware, and they can pick the core variant in order to optimise for their workloads (all the different vector extensions for example). There's an interesting market for that kind of thing, either full FPGA to ASIC replacement, or drop in replacement FPGAs of lower cost (The Rigol MHO98 replaced the Xilinx FPGA of the previous generation with a substitute from Fudan). If you're shipping a lot of hardware, that sort of thing becomes worthwhile.