Trezor wants to respond quickly to demand-triggering events like the FTX collapse by taking control of wallet chip production.
Hardware wallet manufacturer Trezor is accelerating the production of new Trezor wallets by producing its own wallet silicon chips.
Trezor officially announced on Feb. 27 that the firm would start facilitating the production of its key component, the chip wrapper, in its flagship product — the Trezor Model T.
The move aims to significantly optimize Trezor wallets’ production, reducing lead times in the supply cycle from two years to several months.
The optimization will also eliminate delays in shipping finished products and protect consumers from exposure to price fluctuations based on component supply and demand, Trezor said. As previously reported, demand for Trezor wallets spiked by at least 300% after the FTX collapse in November 2022, as crypto investors rushed to move their crypto holdings from centralized crypto exchanges.
A spokesperson for Trezor stressed that the new chips will be implemented exclusively for the firm's Trezor T model, while other Trezor wallets will remain unaffected. "Model One has a different chip unaffected by the chip crisis. We plan to unify the chips for future models so all of them can be equipped with our new chip," the representative said.
Trezor doesn't expect that the price of new wallets will be affected due to the change, the spokesperson noted, stating:
"Now the peak in chip prices is apparently ending, our own chips are more or less the same price as the mass-produced ones. But the significant benefit is that we can handle any future potential chip shortage without increasing the price or delays in delivery."
Before becoming a wallet chip producer for Model T, Trezor relied on the chip producer STMicroelectronics, which was associated with some supply vulnerabilities due to factors like geopolitical disruption, labor shortages due to COVID-19, crypto market conditions and other events. By taking control of the wallet chip supply, Trezor can respond quickly to all these factors and meet the demand at all times.
“By unpacking the process, identifying areas where we could take control, and collaborating with our partner STMicroelectronics in new ways, we’ve managed to make the manufacturing as agile as it can be,” chief financial officer Štěpán Uherik said.
The new business model also enables more design freedom for Trezor’s future products, allowing the wallet provider to build the hardware wallet devices from scratch.
The news comes a year after Tropic Square, a startup operated by Trezor’s parent firm Satoshi Labs, launched a new open-source chip called TROPIC01. The chip provides cryptographic key generation, encryption, signing and authenticating users through digital identification methods. Trezor was reportedly expected to become the first customer of Tropic Square for the product.
“The chosen business model is very unique and can be applied in exceptional cases. Firstly, as a manufacturer, we require high minimum order quantities, and secondly, the customer must have specific know-how to encapsulate semiconductor components,” STMicroelectronics sales manager Tomáš Pokorný said.
Related: Spotify testing Web3 wallets integration
Trezor originally announced plans to take control of wallet chip production in collaboration with Tropic Square in May 2020, citing a wide number of reasons for such a move, including expensive chip vendor certification from the government. According to Trezor, state certification policies “exclude independent companies and open-source initiatives from being used in professional areas.”
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