Some people expect that the market for AI (artificial intelligence) speakers will grow to 100 million units per year by 2020. However, the production methods and supply chains of them have not been reported much.

So, this report is focused on the production methods and supply chains of AI speakers. The first half of the report is focused on the designing/production system of Amazon.com Inc, which developed the market, and its employment of SoC (system on chip). In the second half, I will explain about GongBang, which is one of the reasons why AI speakers are popping up like bamboo shoots after the rain.

Hardware sales of more than US$2.855 Bln

Amazon.com now can be called a company of branded electronics devices. Considering its system for developing devices, the number of employees and sales figures, I feel that we should not see it as an online retailer or rental server business operator.

Amazon.com comprehensively designs the "Amazon Echo" series of AI speakers in house. Amazon Lab126 Inc, its subsidiary, designs all of its hardware. Lab126 has its bases in Silicon Valley, Shenzhen, etc, and has been actively employing engineers who have experience in the development of smartphones, personal computers and so forth.

The "Alexa" cloud-based voice interactive AI is being developed at Amazon.com's headquarters in Seattle and a base in Cambridge, Mass, the US. The number of employees engaged in the development of the Echo has already exceeded 5,000 1).

"Amazon Echo" released in Japan. It is the second-generation product featuring enhanced sound quality, etc. (source: Amazon.com)

Sales of Amazon.com's hardware business is expected to be more than US$2.885 billion in 2017. It was calculated by doubling the amount of exports of its manufacturing subcontractors in the first half of 2017 (US$1.154 billion) and supposing that Amazon.com's gross margin ratio is 20%. I said it is "more than US$2.885 billion" because the company entrusts the EMS/ODM of some of its products to Inventec Corp (Taiwan), etc and sells peripheral devices under the brand of Amazon Basic (For example, FDK Corp supplies AA nickel-metal-hydride (NiMH) rechargeable batteries for them).

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