Tuesday, July 27

Intel Stock Sinks on Report Microsoft May Build Own Chips for Azure Servers – Barrons

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Shares of chip makers


and Advanced Micro Devices took a hit late Friday on a report that


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



The story notes the move follows a similar effort by


(AMZN) and other companies with large server farms.


(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.

Asked to comment, Intel responded with a statement that did not directly respond to the report, but instead focused on broader market opportunities. “The incredible demand for computing fueled by new workloads like AI is driving more silicon experimentation in the cloud,” the company said. “Building on decades of x86 ecosystem innovation, we are committed to providing customers the world’s best CPUs and new products from GPUs to AI chips. In this expanding market, we expect to gain share in many areas like AI training, 5G networks, graphics and autonomous driving.”

AMD did not 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 eric.savitz@barrons.com

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