Trezor to produce chips for hardware wallets to shorten supply cycle

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 will start facilitating the production of its own key component, the chip wrapper, in its flagship product, 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% in the aftermath of the FTX collapse in November 2022 as crypto investors rushed to move their crypto holdings from centralized crypto exchanges.

Prior to becoming a wallet chip producer, Trezor was exposed to third party supply vulnerabilities due to factors like geopolitical disruption, labor shortages due to COVID-19, crypto market conditions and other events. By taking control of supplying wallet chips, Trezor has obtained the opportunity to 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 Št?pán 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 on its own.

The news comes a year after Tropic Square, a startup operated by Trezor’s parent firm Satoshi Labs, launched a new open-source chip known as 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.

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.”