Microsoft Corp. is working on in-house processor designs for use in server computers that run the company’s cloud services, adding to an industrywide effort to reduce reliance on Intel Corp.’s chip technology.
The world’s largest software maker is using Arm Ltd. designs to produce a processor that will be used in its data centers, according to people familiar with the plans. It’s also exploring using another chip that would power some of its Surface line of personal computers. The people asked not to be identified discussing private initiatives. Intel’s stock dropped 6.3% to close at $47.46 in New York, leaving it down 21% this year.
The move is a major commitment by Microsoft to supplying itself with the most important piece of the hardware it uses. Cloud-computing rivals such as Amazon.com Inc. are already well down the road with similar efforts. They’ve argued their chips are better suited to some of their needs, bringing cost and performance advantages over off-the-shelf silicon primarily provided by Intel.
AMD is the second-largest maker of chips that run PCs and it’s been staging a comeback in the server market after being largely shut out by Intel for most of the last decade. AMD stock declined 1% on Friday. Xilinx Inc., another chipmaker that AMD is acquiring, slipped 1.8%.
“The incredible demand for computing fueled by new workloads like AI is driving more silicon experimentation in the cloud. Building on decades of x86 ecosystem innovation, we are committed to providing customers the world’s best CPUs and new products from GPUs to AI chips,” Intel said in a statement. “In this expanding market, we expect to gain share in many areas like AI training, 5G networks, graphics and autonomous driving.”
This spells big trouble for Intel as the tech giants are all pushing to build their own chips in house