Amazon is ramping up efforts to produce custom chips for its key consumer devices, a strategy revealed by the company’s head of devices and services. Panos Panay shared details of the semiconductor initiative, noting that Amazon is manufacturing its own end-to-end silicon for devices it ships. This includes hardware such as the Echo Show 8, Echo Show 11, and Fire TV.

The company unveiled the AZ3 and AZ3 Pro chips last October. These components are designed to run AI models directly on devices rather than relying on the cloud. This approach is often considered faster and more secure. Despite the increased focus on in-house production, Amazon continues to utilize chips from other manufacturers, including Qualcomm.

Amazon Builds Its AI Ecosystem

The intensified focus on chip production aligns with Amazon’s broader initiatives to enhance AI capabilities. The company has rolled out Alexa+ across the U.S., an upgrade to its voice assistant designed to handle complex tasks and connect devices across the Ring, Echo, and Fire TV ecosystem. In May, Amazon launched Alexa for Shopping, an AI shopping bot that transforms the search bar into a Q&A engine.

Bank of America recently reiterated its Buy rating on Amazon, citing the potential of Alexa AI to drive engagement during Prime Day. Analysts view the event as a strategic opportunity to increase awareness of the company’s AI-powered shopping assistant.

The Future of AI Devices

Panay indicated that advances in AI could shift computing beyond traditional apps and screens toward more natural, context-aware conversations. However, the specific future form factor for AI devices remains uncertain. Separately, Qualcomm CEO Cristiano Amon noted that his company is working on more than 40 AI-powered devices, including smart glasses and earbuds, designed to act as personal AI assistants.

Australia's competition regulator has sued Amazon.com Inc., alleging the e-commerce giant used unfair subscription terms to force more than one million annual Prime members to either watch advertisements on Prime Video or pay extra to remove them. The Australian Competition and Consumer Commission (ACCC) claims Amazon relied on unfair contract terms between November 2023 and August 2025 to alter the conditions of its Prime Video service, impacting consumers who had already paid for annual memberships.

Allegations of Unfair Contract Terms

The ACCC alleges that Amazon introduced advertisements on Prime Video in July 2024. Following this change, annual Prime subscribers were required to either accept the ads or pay an additional AU$2.99 per month for an ad-free experience. The regulator contends that customers who chose to cancel their annual Prime memberships due to this change were not entitled to refunds for the unused portion of their subscriptions.

Regulatory Action and Response

Proceedings have been filed in the Federal Court. The ACCC is seeking penalties, consumer redress, legal costs, declarations that the contract terms were unfair, and additional court orders to address the alleged conduct. ACCC Chair Gina Cass-Gottlieb stated that Amazon Australia included multiple unfair terms in its contracts with Australian annual Prime subscribers and relied on these terms to implement ads on Prime Video. The investigation began after receiving consumer complaints regarding the ad rollout.

In response, an Amazon spokesperson stated that the company is reviewing the case filed by the ACCC in detail. Amazon emphasized that it has cooperated with the ACCC throughout its investigation and remains focused on providing the best experience for its Australian customers.