Microsoft Reportedly Moving Its Servers to Custom Chips

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With the Apple M1 in the hands of consumers and Amazon currently working to shift its Azure servers from Nvidia’s processors to its own in-house chips, it’s clear that major tech industry players are keen to bring more and more of their production lines as close to home as possible. And according to a new report from Bloomberg, Microsoft’s gearing up to be the next company to transition to in-house chips. At least for some of its products.

“Microsoft Corp. is working on in-house processor designs for use in server computers that run the company’s cloud services,” Bloomberg writes. “It’s also exploring using another chip that would power some of its Surface line of personal computers.”

Like Amazon’s Graviton 2 chips, these processors will be Arm-based, which makes sense. Windows on Arm already exists, so Microsoft’s familiar with it. But since Nvidia owns Arm, the goal here is probably to reduce reliance on Intel rather than to make the company’s computing perfectly bespoke.

This also isn’t the first time Microsoft’s explored using self-developed chips, though they’ve mostly been made in collaboration with other companies until now. Microsoft already uses an Arm-based chip that it’s co-developed with Qualcomm, the SQ2, in its Surface Pro X tablet. The Surface Laptop 3 also uses a custom Ryzen chip, and the company’s long used custom processors co-developed with other manufacturers in its game consoles, like the Xenon chip it made with IBM.

But using custom chips in its servers is a first for the company. 

“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,” Microsoft Communications Chief Frank Shaw told The Verge, “while also fostering and strengthening partnerships with a wide range of chip providers.”

Which also points to another potential reason for the move: as companies recover from the pandemic, they’re facing pressure to become more self-reliant.

Still, according to Bloomberg, this move has been in the works for a while, as Microsoft’s spent the last few years recruiting more and more processor engineers.

Intel’s long been able to rely on its business sales when its consumer chips fall behind, but according to Bloomberg, Intel’s stock is now down 21% this year as more and more companies distance themselves from it.

Rocket Lake better impress.

Michelle Ehrhardt

Michelle Ehrhardt is an editor at Tom's Hardware. She's been following tech since her family got a Gateway running Windows 95, and is now on her third custom-built system. Her work has been published in publications like Paste, The Atlantic, and Kill Screen, just to name a few. She also holds a master's degree in game design from NYU.

  • NightHawkRMX
    Somehow I don't think Nvidia is regretting their choice to acquire arm.
  • Schlachtwolf
    I feel this may be good for the "normal consumer". If more of the big tech go in-house then the market importance of the the normal user will become even more important to the profit margins of Nvidia, AMD and Intel, that may mean a more competitive market and hence better pricing. The GPU market is just a complete F##k-Up right now. I wa looking at the Asus 6800xt with the AIO and it was 1.129€ 2 days ago here in Germany. I looked again this evening and it is now 1.196€ ...... madness.
  • WarWolverineWarrior
    So how's the security on this chip? Also who's testing the vulnerability on these. Intel and amd chips are widely available and being tested all the time.
  • digitalgriffin
    One of NVIDIA's key planks into becoming a world leading company was to secure massive profits from their server sales into AI. These are highly lucrative profit items and contribute significantly to NVIDIA's bottom line. Also server sales are subject to a less fickle customer base. Once you are in, you are in for a long time as software is optimized around that platform.

    Seems like other companies are starting to balk at what NVIDIA wants to charge. And NVIDIA has always had a very spotty history (at best) when it comes to vendor relations. As they say "The itches got too big for their britches."

    Intel is under assault from AMD, Amazon, Apple, and now Microsoft.
    NVIDIA is now under assault from AMD, Amazon, Apple and now Microsoft

    And I couldn't be more pleased. Monopolies are bad as a whole for everyone.

    Thank goodness for competition.

    Side rant: It will be interesting to see where x86 ends up in a decade. x86 as a whole is an enormously complex architecture with multiple legacy support modes. It creates a lot of circuit overhead which limits the potential of it's advancement. It's the difference between making a Turbo Prop go faster (x86) and a jet turbine (Arm/RISC/MIPS) go faster. The problem is the entire airplane (windows desktop and console gaming) is built around the turbo prop.