Microsoft to design in-house server processors to reduce dependency on Intel

By Rahul Vaimal, Associate Editor
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Microsoft, the American tech giant, is working on in-house processor designs for use in server computers that power the cloud services of the company, adding to an industry wide initiative to decrease dependency on the chip technology of US-based chipmaker Intel.

Arm Ltd. designs are being used by the world’s largest software maker to produce a processor that will be used in its data centers. It’s also considering using another chip that would power some of its Surface line of personal computers.

The move marks Microsoft’s major commitment to providing itself with the most essential piece of hardware that it uses. With similar efforts, cloud-computing competitors such as Amazon are already far down the track. They’ve argued their chips are better suited to some of their needs, bringing cost and performance advantages over chips provided by Intel.

Microsoft’s efforts are more likely to result in a server chip than one for its Surface devices, though the latter is possible, said sources. “Because silicon is a foundational building block for technology, we’re continuing to invest in our own capabilities in areas like design, manufacturing and tools, while also fostering and strengthening partnerships with a wide range of chip providers,” Microsoft spokesman Frank Shaw said.

Intel’s huge market share

Intel’s Xeon range of server chips currently power most of the machinery at the heart of the internet and corporate networks, generating the company’s most profitable source of revenue. It still has about 90 percent of this market. Some Xeon models cost as much as a compact car.

“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.”

Energy efficiency 

Customers such as Microsoft have increasingly turned to alternative solutions to make sense of the mountain of data that cloud computing and smartphones generate. The adoption of artificial intelligence to automate that process has sparked a flood of new chip designs.

The biggest concern for owners of the giant data centers behind services like Office 365 has become the cost of providing electricity to their growing hardware footprint. Arm-based chips are often more energy efficient.

If Microsoft pushes forward with its own chip for PCs it will be following the iPhone maker Apple, which is moving its entire Mac line away from Intel processors. While neither Apple nor Microsoft devices own large chunks of the PC market, their offerings are positioned as premium products with better designs and more advanced capabilities. When announcing its first new Macs based on the M1 chip, Apple claimed the performance boost compared to standard PCs.

Microsoft currently uses Arm-based chips from Qualcomm in some of its Surface PCs. It ported Windows to work on these types of chips, which have typically been used in smartphones. Apple also uses Arm technology in its processors. Other Surface models use Intel chips.