Shares of chip makers Intel and Advanced Micro Devices took a hit late Friday on a report that Microsoft is working on developing its own microprocessors for servers used in its Azure cloud service and possibly for its Surface personal computers.
Bloomberg reports that Microsoft is using designs based on Arm technology to build a processor to be used in its data centers, and that the company is also considering building another chip for Surface devices. Arm is owned by SoftBank (SFTBY), which has agreed to sell the business to Nvidia (NVDA).
The story notes the move follows a similar effort by Amazon.com (AMZN) and other companies with large server farms. Apple (AAPL) recently announced the first MacBook Air and MacBook Pro laptops with processors designed in-house and based on Arm technology.
“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,” Microsoft spokesman Frank Shaw said in a statement.
Neither Intel nor AMD immediately responded to a request for comment.
Patrick Moorhead, an analyst with Moor Insights & Strategy, noted that there is “heated competition” in the cloud infrastructure market, adding that he wouldn’t be surprised by a move by Microsoft to catch up with Amazon Web Services. “Silicon is strategic, not a commodity, and the industry had finally awoken to this,” he added.
Intel on Friday fell 6.3% to $47.46, while Advanced Micro Devices fell 1% to $95.952, after trading as low as $93.56. Microsoft shares fell 0.4%, to $218.59.
Write to Eric J. Savitz at [email protected]
