Meta Platforms (NASDAQ: META) is stepping up its ambitions as a chipmaker, with its in-house AI chip codenamed Iris set to enter production in September.
The chip was designed with assistance from Broadcom (NASDAQ: AVGO) and will be manufactured by Taiwan Semiconductor Manufacturing (NYSE: TSM), according to an internal memo reviewed by Reuters.
Testing on the Iris chip reportedly took about six weeks and turned up no major issues, suggesting the program is further along than many investors had assumed.
Meta reportedly plans to release a new chip approximately every six months through 2027, a pace that is roughly twice as fast as the industry norm of one new chip per year.
Iris is said to be part of a four-generation family of chips that Meta is designing in-house, underlining the scale and ambition of the company’s semiconductor strategy.
The chips are intended to augment, rather than replace, the graphics processing units Meta purchases from Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD).
Meta plans to bring approximately 7 gigawatts of computing capacity online this year and double that total to 14 gigawatts in 2027, according to the Reuters report.
The company expects 2026 capital expenditures to land between $125 billion and $145 billion, up from a prior guidance range of $115 billion to $135 billion.
Capital expenditures in the first quarter alone reached $19.8 billion, and Meta guided for second-quarter revenue of $58 billion to $61 billion.
The spending is being underwritten by a business that continues to grow at a remarkable pace, with first-quarter revenue rising 33% year over year to $56.3 billion.
Meta posted a 41% operating margin for the first quarter, while earnings per share of $10.44 grew 62% year over year, though a one-time $8.03 billion tax benefit added $3.13 per share to that figure.
“We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs,” said CEO Mark Zuckerberg in the company’s first-quarter earnings release.
Shares of Meta rose about 6% on Friday following the Reuters report, reflecting investor enthusiasm for a strategy that could deliver more computing power per dollar spent.
At approximately $672 per share, Meta trades at about 24 times earnings and roughly 19 times forward earnings, a relatively modest valuation given the company’s growth rate.
Every in-house chip Meta deploys represents potential pricing pressure that Nvidia could eventually feel, while directing more business toward Broadcom and TSMC in the process.
