Watch out, Intel: Microsoft reportedly designing its own ARM-based chips for servers and Surface PCs

According to Bloomberg News, Microsoft is designing its own ARM-based processors for servers and possibly a future Surface device. The processors will be used in servers for Microsoft’s Azure cloud services and be based around ARM designs, according to the report. Microsoft is also reportedly “exploring” using another chip for some of its Surface devices, but it’s not clear if this will progress into a final product.

Microsoft currently uses Intel-based processors for the majority of its Azure cloud services, and most of the company’s Surface lineup run on Intel chips, too. Microsoft has worked with AMD and Qualcomm for custom chips for its Surface Laptop 3 and Surface Pro X devices, showing a willingness to move away from just Intel.

The Verge reports that Microsoft co-engineered an ARM-based SQ1 processor for the Surface Pro X last year and followed this up with an SQ2 variant a couple of months ago. AMD also worked with Microsoft to create a custom version of its Ryzen processor for the Surface Laptop 3. A move to ARM on the server side is certainly more significant, particularly for Intel. Apple has already signaled its move away from Intel chips for its Mac products, with its own M1 silicon based on ARM designs. Intel’s server chips currently rule the server market, and AMD has already been chipping away at this lucrative market with its own EPYC processors.

Amazon, Microsoft’s main cloud rival, also looks like a significant threat to Intel and AMD, with its own ARM-based Graviton2 processors that were launched a year ago on AWS. Still, ARM-based servers are a small part of the market right now, despite the performance and cost benefits that they can deliver.

For its part, Microsoft hasn’t denied the rumors. “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,” says Microsoft’s communications chief Frank Shaw.

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