The Spectre of Chip Consolidation

[Bloomberg] [Fully Charged]( From [Bloomberg](   [FOLLOW US [Facebook Share]]([Twitter Share]( [SUBSCRIBE [Subscribe]](  Hello everyone. [Ian](mailto: ianking@bloomberg.net) here. It turns out that the microprocessors running all the devices we rely on and care about -- smartphones, tablets, personal computers and even internet servers -- aren't as secure as we've been led to believe. Panic followed a report that most Intel Corp. chips have a vulnerabilities that could expose crucial computer data, such as passwords and encryption keys. Intel had to [explain itself](, and in the process said that all modern processors have these flaws. Until now, the industry had argued data was much safer when secured by a chip, rather than software. The fallout from all this is still unfolding. Software patches are on their way or already in place. We may end up wondering what all the fuss was about, or it could be a profound wake up call for the industry with wide-reaching consequences. But one thing is clear: The rash of mergers and acquisitions in the semiconductor business has made this week's situation worse. Intel was keen to stress it's working with the industry to resolve the issue and turn this into a collective effort with shared responsibility. But "the industry" is really just Intel and a couple of other companies. These flaws, known as Meltdown and Spectre, highlight how few companies provide the crucial building blocks for computing devices. If Intel and ARM Holdings Plc screw up, we don't have a lot of other places to turn. Intel's market share numbers are well known. Servers: more than 99 percent; Laptops, more than 90 percent; Desktops more than 88 percent. ARM's designs are the basis of chips that run more than a billion smartphones sold every year -- basically the whole market. Chipmakers have been buying each other at an unprecedented rate to share the rising costs of designing and building faster chips. The result: the biggest companies' reach has only been growing. That's a problem, particularly in this case, because any weaknesses in processors are almost immediately a global problem as the components come from a small handful of companies that have used similar design ideas. Semiconductors are churned out much more efficiently these days. And they're powerful. But there's no diversity. What if there were 10 major chipmakers all competing with different designs? The vulnerabilities exposed this week wouldn't be so widespread and so worrying, that's for sure. The main buyers of chips have already realized it's a problem to depend on so few suppliers. They have been working on solutions that may be accelerated now. Apple has been designing its own processors for the iPhone for several years. It still depends on Intel for all its computer processors, though. Google has introduced its own chips for data centers and in October unveiled one for the camera in the Pixel 2 smartphone. Microsoft Corp. and Amazon.com Inc. have experimented with alternative suppliers and new types. Yet the fact remains, Intel provides them with almost all their server processors. If they're going to break out of this stranglehold, these big customers must fight the forces that consolidated the chip industry. That means spending a lot more money on their own components. It's no coincidence that the only company to have partially shaken off this reliance is the richest company of all: Apple.  Here's what you need to know about the Meltdown and Spectre [chip flaws](.  Apple fans beware. The company said all Mac computers and iOS devices, like iPhones and iPads, are [affected by Meltdown and Spectre](. Fixes are either already out or in the works, and there will be very little or no impact on performance, Apple noted.  Mark Zuckerberg's latest New Year's resolution isn't as fun as his previous annual commitments. Facebook Inc.'s Chief Executive Officer will spend 2018 [trying to fix]( problems, like hate speech and misinformation, that have dogged his wildly popular social network recently.  Google's former driverless car chief finally has major partnerships with the auto industry. Aurora, a startup co-founded by Chris Urmson, is [teaming up](with Volkswagen AG and Hyundai Motor Co. to develop self-driving electric vehicles.   ThielFeed? Billionaire investor Peter Thiel is exploring [starting a conservative news outlet](, with backing from the powerful Mercer family and a cast of Fox News celebrities, according to revelations in a new book and a report from BuzzFeed News.  It was a bumper year for Apple app developers. They made [30 percent more]( than a year earlier, though that was a slowdown from 2016.    You received this message because you are subscribed to the Bloomberg Technology newsletter Fully Charged. You can tell your friends to [sign up here](.  [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022