Satya Nadella, chief executive officer of Microsoft Corp., speaks at the company’s annual shareholder meeting in Bellevue, Washington, on Nov. 29, 2017.
David Ryder | Bloomberg | Getty Images
Intel was down a whopping 6% Friday afternoon after a Bloomberg report that Microsoft plans to design its own chips for its Surface PCs and servers.
Intel famously had a partnership with Microsoft as the maker of the primary processor for Windows PCs.
The report comes a month after Apple started selling PCs with a proprietary M1 processor instead of Intel chips. The chips are reportedly based on technology from Arm, which Nvidia is currently acquiring from Softbank.
Apple’s chips for its iPhones and Amazon’s server chips are also based on Arm’s instruction set, which is different from the x86 technology that Intel primarily uses.
Earlier this month, a senior Microsoft executive did not dismiss the idea that Microsoft would build its own “first party” chips at a conference.
“ The partnerships we have in this area, from the OpenAI efforts we have to our relationship with Intel and Arm developments we have, certainly point to the need to have advanced capabilities here, whether we own it ourselves. build or have an ecosystem. from external partners, it has yet to be disclosed, ” said Judson Althoff, executive vice president of global commercial affairs at Microsoft, during a performance at the UBS Global, Technology, Media and Telecommunications conference on Dec. 8.
Microsoft said in 2017 that it was working with Arm server makers to optimize silicon for use in its own data centers. Windows currently runs on Arm-based PCs, usually with chips made by Qualcomm. Microsoft wants to ensure that more applications can run on machines with Arm chips. It has started testing software that allows people to run applications originally built for machines with 64-bit chips from AMD and Intel, for example.
Intel reported $ 9.85 billion in revenue from its group selling PC chips in the quarter ended September. Server chips are also an important issue for Intel. In the quarter ended September, Intel reported $ 5.91 billion in revenue for its Data Center Group, which sells server chips.
Intel has had problems manufacturing its chips in recent years. Intel operates its own chip factories called “fabs” compared to other chip designers, which contract with companies in Asia to manufacture chips according to customer specifications.
The more transistors a chipmaker can fit in the same space, the more efficient a chip is. Intel currently supplies chips with 10-nanometer transistors, but specialty foundries, such as TSMC, now make 5-nanometer chips that are technically superior.
Earlier this year, Intel CEO Bob Swan said it is considering outsourcing manufacturing, as Apple is doing.
Representatives from Intel and Microsoft did not immediately return requests for comment.
—Jordan Novet contributed to this story.