Sources: Microsoft is working on in-house designs for chips to run its cloud servers and Surface PCs
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 …
Bloomberg
Context & Ripple Effects
The 2020 report lands mid-arc rather than at the start of it: Microsoft had already been loosening Intel's grip on Azure for years, first by testing Windows Server on ARM chips from Qualcomm and Cavium in 2017, then by moving more than half of Azure's co-processors to Xilinx parts in 2018. Designing its own processors is the logical next step after those sourcing experiments.
First-order effects
Intel faces a second front of erosion at its largest cloud customer: beyond losing the co-processor sockets to Xilinx, Microsoft now threatens the main server CPU itself, while Surface gains an in-house silicon option.
Microsoft's server partners Qualcomm and Cavium, brought in for the ARM experiments, see their role potentially absorbed into designs Microsoft controls outright.
Second-order effects
Custom silicon gives Microsoft pricing and roadmap leverage over Intel and AMD in Azure procurement negotiations, since every in-house chip shipped is a socket they can no longer price against.
The move pressures rival cloud providers to match in-house designs or defend their margins with volume discounts, accelerating the arms race in workload-specific accelerators.
Hyperscaler systems bargaining shifts structurally: chip companies compete for manufacturing contracts with firms that are simultaneously their biggest customers and their most credible replacements.
The trend: Hyperscalers are progressing from diversifying merchant chips to designing their own silicon, converting supplier relationships into foundry contracts.
SCOOP Microsoft is working on its own ARM-based chip designs for server and Surface in a new threat to Intel's dominance: https://www.bloomberg.com/... and more details on @TheTerminal by @ianmking and me
From MSFT's Frank Shaw: “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.”
To paraphrase Oprah “you build a system on a chip, and you build a system on a chip. Everybody make a system on a chip.” https://twitter.com/... https://twitter.com/...
Server & Azure is another matter, but for Windows on ARM to be a threat to Intel in PCs, it needs to match or exceed Intel's perf without cranking the TDP back up to Intel levels, and it needs to run most Windows software as good as or better than on Intel — like Apple Silicon
Chips are going from components to DIFFERENTIATORS. Expect more hyperscalers, gadget companies, and car companies to take Microsoft, Google, Intel, Tesla, and Apple's lead in building in-house. https://twitter.com/...
Microsoft should just partner with Samsung, who's not only building processors, but also fabbing them too. They also have the same enemy: Apple. https://twitter.com/...
ARM Windows machines exist today; they're slow, have vast software incompatibilities (currently) and sluggish emulation of legacy apps, offer few benefits outside of battery life, and they mate nowhere near as well as macOS does with Apple Silicon. It's a hedge more than a threat
Reminder: ARM Macs are so successful because they have Apple silicon inside them, & all that entails, not because they have an ARM CPU instead of Intel. A decade of industry-leading chip design & scale, plus the kind of full-stack control & optimization others only dream of
Microsoft is reportedly designing its own ARM-based processors for Surface PCs and servers. Uh oh Intel. Details here: https://www.theverge.com/... https://twitter.com/...
BREAKING: Microsoft is working on in-house designs for chips to run its cloud servers and Surface PCs, the latest tech giant to reduce reliance on Intel's technology https://www.bloomberg.com/... https://twitter.com/...
I see this more as an “and” than an “instead of.” No doubt Azure, much like AWS will go down this road but it isn't Armageddon for x86 or Intel. Silicon and #cloud scale is massive. $INTC $MSFT #Tech https://twitter.com/...