Satya Nadella, CEO of Microsoft Corp., speaks during the company’s annual shareholders meeting in Bellevue, Washington, on November 29, 2017.
David Ryder | Bloomberg | Getty Images
Intel fell 6.3% on Friday after a Bloomberg report that Microsoft plans to design its own chips for its surface computers and servers.
Famous Intel has had a long-standing collaboration with Microsoft as a leading manufacturer of processors for Windows computers.
The report comes a month after Apple began selling computers with its own M1 processor, rather than Intel chips. According to reports, the chips are based on Arm technology, which Nvidia is acquiring from Softbank.
Apple’s chips for their iPhones and Amazon’s server chips are also based on Arm’s instruction set, which is different from the x86 technology Intel uses primarily.
Earlier this month, a senior Microsoft executive did not reject the idea of Microsoft building its own “first-party” chips at a conference.
“The partnerships we have in this area, from OpenAI’s efforts to our relationship with Intel and Arm developments, we have certainly pointed out the need to have advanced capabilities here, whether we build it as a first party or we have a third-party ecosystem, yet to be revealed, ”said Judson Althoff, executive vice president of global business affairs at Microsoft, during an appearance at the UBS Global, Technology, Media and Telecommunications conference on December 8th.
Microsoft said in 2017 that it was working with Arm server manufacturers to optimize silicon for use in their own data centers. Currently, Windows runs on Arm-based PCs, usually with chips manufactured by Qualcomm. Microsoft wants to make sure that more applications can run on machines running Arm chips. He has started testing software that can allow people to run applications that were originally built for machines that carried 64-bit chips the size of AMD and Intel.
Intel reported $ 9.858 billion in revenue from its group selling PC chips in the quarter ending September. Server chips are also an important business for Intel. In the quarter ended September, Intel reported $ 5.91 billion in revenue for the Data Center group that sells server chips.
Intel has been having trouble making its chips in recent years. Intel controls its own chip factories, called “fabs,” compared to other chip designers, which contract with Asian companies to make chips to customer specifications.
The more transistors a chip maker can fit in the same space, the more efficient a chip will be. Intel currently ships chips with 10-nanometer transistors, but dedicated foundries, such as TSMC, are manufacturing 5-nanometer chips, which are technically superior.
Earlier this year, Intel CEO Bob Swan said he was considering outsourcing its manufacturing, like Apple does.
Representatives from Intel and Microsoft did not immediately return requests for comment.
—Jordan Novet contributed to this story.