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Microsoft Designing Its Own Chips for Servers, Surface PCs

  • Move is potential threat to Intel’s data center chip business
  • Software giant is using Arm designs for in-house processors
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WATCH: Microsoft will make its own chips to rely less on Intel. Markets: The Close." (Source: Bloomberg)
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Microsoft Corp. is working on in-house processor designs for use in server computers that run the company’s cloud services, adding to an industrywide effort to reduce reliance on Intel Corp.’s chip technology.

The world’s largest software maker is using Arm Ltd. designs to produce a processor that will be used in its data centers, according to people familiar with the plans. It’s also exploring using another chip that would power some of its Surface line of personal computers. The people asked not to be identified discussing private initiatives. Intel’s stock dropped 6.3% to close at $47.46 in New York, leaving it down 21% this year.

The move is a major commitment by Microsoft to supplying itself with the most important piece of the hardware it uses. Cloud-computing rivals such as Amazon.com Inc. are already well down the road with similar efforts. They’ve argued their chips are better suited to some of their needs, bringing cost and performance advantages over off-the-shelf silicon primarily provided by Intel.