Moving Away from Intel, Microsoft is Designing its own Chip.
By: Glovory Tech
Tags: Microsoft, Technology News, Intel, Computers, Technology

On December 18, Bloomberg reported that Microsoft is currently working on its ARM-based processors. The new ARM design chip is for the servers of Microsoft’s Azure data center and cloud services. However, intense speculation also mentions that there will be a new ARM-based chip for the latest lineup of Microsoft Surface devices.

Since last year, this intention has been shown when Microsoft co-engineered SQ1, an ARM-based processor, for the Surface Pro X, and the following SQ2 has also released this year. On the other hand, Microsoft has also reportedly worked with AMD and Qualcomm for custom chips for its Surface Laptop 3 and Surface Pro X.

Microsoft is working on an in-house processor design for server computers underlying the cloud services and data center “Azure” to replace Intel Corp.’s chip that they are currently using. Microsoft’s communication chief, Frank Shaw, claimed that the company is advancing its foundational building block for its silicon technology. Microsoft is sincerely investing in design, manufacturing, and tools while expanding cooperation with ARM Ltd's chip providers.

From Apple to Microsoft: Why everyone turns away from Intel?

A shift to ARM on the server-side is inevitably having a significant impact, especially for Intel. Apple has already made the same move for its Mac products by releasing M1 silicon based on an ARM design. Some argue that Microsoft responds to Apple’s recent decision. It is worth noting that Microsoft and Qualcomm have been partnering since 2019, creating chips for the Surface Pro X.

Additionally, in 2017, Microsoft also announced that it has been including multiple ARM providers, including Qualcomm and Cavium, to get Windows Server to run ARM but for its own internal data center use only to evaluate Azure services ARM servers. Yet that time, experts did believe that ARM is useful for internal cloud applications such as search and indexing, storage, database, big data, and machine learning workloads.

The competition in the data center market has also got more robust. Advanced Micro Devices (AMD) releases its zen-designed EPYC processor. Amazon, Microsoft’s main cloud competitor, also challenge their opponent and Intel with its ARM-based Graviton2 that was launched a year ago on AWS. The latter claimed that their chips are better accommodated for their needs, resulting in cost and performance improvements over replaced silicon chips provided by Intel.

For now, ARM-based servers are still less dominating than Intel. Intel’s Xeon server processor currently powers most of the infrastructure of the internet and corporate networks. It is the most profitable Intel revenue source, where they cover at least 90% of them. Some Xeon models even cost as much as a brand new city car.

However, the table might turn soon. ARM is preferable in terms of performance and cost-benefit that it can deliver. The threat is real for Intel’s server chip business. As a result, Intel’s stock dropped by 6.3% to close at $47.46 in New York, leaving it below 21% this year.

Even though the near future seems so challenging for Intel, the company showed optimism to deal with the competition, such as experimenting with its artificial intelligence computing, improving x86 ecosystem innovation. The combination they believe would bring the world’s best CPU, apart from developing advanced GPU and even an AI chips. Intel is expected to gain more share in several areas such as AI training, 5G networks, graphics, and autonomous driving.

Paving up the way for the long run

The seriousness of being independent of the third-party provider appeared since Microsoft stepped up hiring processors engineers in 2017. They recruit the backyard of chipmakers such as Intel Corp., AMD Inc., Nvidia Corp., and Qualcomm Inc.’s former engineer cut adrift due to abandoned server chip plan. Microsoft mentioned that they are investigating new hardware and software solutions to meet the growing demand. They say that they are looking specifically for Cloud technologies for the Azure New Technology (ANT) to develop and deploy ARM 64-bit server in the data center. The project would run multi-year, involving partnerships with multiple silicon companies to build technical expertise in silicon, system, operating systems, and application stacks.

The changing of the game

Microsoft has increasingly turned to alternative solutions to process the mountain of data and information that cloud computing generates. Its top concern is the cost of providing electricity to its growing hardware footprint supported by its Azure, such as Microsoft 365. In this specification, ARM-based chips have proven to be more energy-efficient. Apart from power efficiency, the processor game gets stronger to a computing system fueled by artificial intelligence, enabling the automation and simplification of processing data. Hence, AI adoption has triggered a range of new chip designs ready to disrupt the dominating provider if they do not really step up their game.

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Contributor: Rachmadita Kusumastiti