Satya Nadella, Chief Executive Officer of Microsoft Corporation, speaks during the company’s annual shareholders meeting on November 29, 2017 in Bellevue, Washington.
David Ryder | Bloomberg Getty Images
Intel dropped 6.3% on Friday after Bloomberg reported that Microsoft planned to design its own chips for its Surface PC as well as servers.
Intel has long partnered with Microsoft as the primary processor manufacturer for Windows PCs.
Microsoft spokesman Frank Shaw said, “Because silicon is a fundamental building block for technology, we are continuing to invest in our capabilities in areas such as design, manufacturing and equipment, as well as strengthening and strengthening partnerships Huh.” in a statement.
A month later reports have come that Apple has started selling PCs using its M1 processor instead of Intel chip. Microsoft chips are reportedly based on technology from Arm, which Nvidia is in the process of acquiring from Softbank.
Apple’s chips for its iPhones and Amazon’s server chips are also based on Arm’s instruction set, which differs from the mainly used x86 technology.
Earlier this month, a senior Microsoft executive did not reject the idea that Microsoft would manufacture its “first party” chips at a conference.
“The efforts of OpenAI have us in this partnership though, with Intel and Arm Development, which certainly point to the need for advanced capabilities that we have, whether we make it a first party or an ecosystem third party. Its partners are yet to be revealed, ”Judson Althoff, executive vice president of worldwide commercial business at Microsoft, said during an appearance at the UBS Global, Technology, Media and Telecommunications Conference on 8 December.
Windows currently runs on arm-based PCs, usually with chips made by Qualcomm. Microsoft introduced the Surface RT tablet in 2012 with an arm chip from Nvidia, although the device was discontinued in 2013. Last year it introduced the Surface Pro X with a Qualcomm arm chip, and it came out with an updated version of the device. year.
Microsoft said in 2017 that it was working with arm server manufacturers to optimize silicon for use in their own data centers.
Intel reported $ 9.85 billion in revenue from its group selling PC chips in the quarter ended September. Server chips are also a major business for Intel. In the quarter ending in September, Intel reported revenue of $ 5.91 billion for its data center group, which sells server chips.
Intel has had challenges with manufacturing their chips in recent years. Intel controls its own chip factories, called “fabs”, as compared to other chip designers, who contract with companies in Asia to manufacture chips to customer specifications.
The more transistors a chipmaker can fit in one place, the more efficient a chip is. Currently, Intel ships are sticking with 10-nanometer transistors, but dedicated foundries like TSMC are now making 5-nanometer chips, which are technically superior.
Earlier this year, Intel CEO Bob Swan said it was considering outsourcing its manufacturing, such as what Apple does.
Intel did not immediately return a request for comment.
-Jordan Novate contributed to this story.