Intel falls for report Microsoft designs own chips for PCs, servers

Satya Nadella, CEO of Microsoft Corp., will speak at the company’s annual shareholders meeting in Bellevue, Washington, on November 29, 2017.

David Ryder | Bloomberg | Getty Images

Intel fell as much as 6% on Friday afternoon after a Bloomberg report that Microsoft plans to design its own chipsets for their Surface PCs as well as servers.

Intel has long been known for its long-standing partnership with Microsoft as the leading manufacturer for Windows PCs.

The report comes a month after Apple began selling PCs using its own M1 processor, instead of Intel chips. The cracks are reportedly based on technology from Army, which Nvidia is currently acquiring from Softbank.

Apple’s chips for its iPhones and Amazon’s server chips are also based on the Arm management set, which is different from the x86 technology that Intel uses in the first place.

Earlier this month, a Microsoft chief executive did not reject the idea that Microsoft would raise its own “first-party” chips at a conference.

“However, our partnerships in this area, from our OpenAI efforts to our relationship with Intel and Army developments, have certainly highlighted the need for advanced capabilities. here, whether we build it in the first party or have an ecosystem. of third-party partners, it’s still kind of a revelation, “said Judson Althoff, executive vice president of Microsoft’s global commercial business, while appearing at UBS Global, Technology, Media and Telecommunications on 8 December.

Microsoft said in 2017 that it was working with Army server manufacturers to optimize silicon for use in its own data centers. Windows currently runs on Army-based PCs, usually with chipsets made by Qualcomm. Microsoft wants to ensure that more applications can run on devices running Arm chips. It has begun testing software that allows people to run applications originally built for devices carrying 64-bit chips from the likes of AMD and Intel.

Intel reported $ 9.85 billion in revenue from its group that sells PC chips in the quarter ending September. Server chips are also big business for Intel. In the quarter ended September, Intel reported $ 5.91 billion in revenue for its Data Center Group that sells server chips.

Intel has faced challenges in manufacturing its chips in recent years. Intel controls its own chip factories, known as “fabs,” as opposed to other chip designers, who contract with companies in Asia to make chips according to customer specifications.

The more transistors a chipmaker can fit into the same location, the more efficient a chip is. Intel currently carries chips with 10-nanometer transistors, but dedicated furnaces, such as TSMC, now make 5-nanometer chips, which are technically superior.

Earlier this year, Intel CEO Bob Swan said they were considering phasing out manufacturing, as Apple does.

Representatives for Intel and Microsoft did not immediately return requests for comment.

– Jordan Novet contributed to this story.