In recent news, Microsoft announced that it may now use ARM-based designs to make its own in-house chips to be used in data centres. This move is reportedly motivated by Microsoft’s increasing inclination towards reducing the reliance on Intel and other market leaders in chip making, said an exclusive reportage from Bloomberg. Additionally, Microsoft is also reportedly looking at making another chip for its Surface line of personal computers.
At this juncture, one may also recall that tech giant Apple too had declared earlier this year that it would be crafting its own processor for the Macs, abandoning its long-standing dependence on Intel.
With that being said, what are the implications of such a trend for traditional chip-making companies, especially Intel, that is touted as a market leader?
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Microsoft Building Its Own Processor
Experts believe that the company is taking conscious measures to move away from complete dependence on just Intel, which currently powers most of the Azure cloud services and most of the company’s Surface lineup.
With the latest reports of the company looking at creating its own Arm-based processor has only strengthened these speculations. Speaking to the publication, Microsoft has not denied the recent development. Spokesperson and Microsoft’s communication head Frank Shaw said, “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.”
It may be noted that in recent years, Microsoft has also upped its game in terms of hiring chip engineers.
This is not a one-off ‘fad’. Apple too announced this year that it would be rolling out Macs with in-house custom-made processors called M1. On the other hand, Apple already produces its own chips and software for its iPhones.
With newly released M1, which is built on Arm-based processor technology, industry experts believe that Apple will be able to explore heightened flexibility and possibilities in terms of innovations that came with producing its own iPhone and iPad processors, which ultimately led to improved efficiency and increased creativity. Further, it is anticipated that like the iPhone shaped the smartphone market, this new offering would influence other PC makers to open for more homegrown processors.
This trend of producing own chips for service and product-specific usage can be further traced back to 2016 when Google announced that it would be making its own chip called the Tensor Processing Unit (TPU) specifically for neural network machine learning based on TensorFlow software.
What Does It Mean For Intel?
With tech companies like Microsoft making an increasing move to Arm-based processors now is a significant development and even a possible concern for chipmakers like Intel.
Speaking of the current market standing, Intel still triumphs over 90% of the market. Its Xeon range of server chips powers most of the machinery at the internet and corporate networks, which majorly drives the revenue at Intel. However, 2020 wasn’t really the best of the times for Intel as its stocks saw a downhill of over 20%. Despite this, Intel hopes to bounce back. “In this expanding market, we expect to gain share in many areas like AI training, 5G networks, graphics and autonomous driving,” said Intel in a statement in 2019.
Notably, rivals like AMD have put up a great fight against Intel in recent times. AMD’s stock surged by 23% this November, gaining a major share of the market for PC and server chips. All said, it is still lagging behind in the race to completely dethrone Intel, yet.
Additionally, with the adoption of artificial intelligence-powered automation processes has brought about a ‘flood’ of new chip design, as recently seen in the case of Microsoft. These developments present a very interesting time in the chip designing industry, and it is left to be seen what future holds for market giants like Intel, in the face of newer challenges.