Intel stock leaks over report Microsoft could make its own chips for Azure servers

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Shares of chipmakers

Intel

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

Microsoft

is working on developing its own microprocessors for the 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 for use in its data centers, and 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

Nvidia

(NVDA).

The story notes that the movement follows a similar effort by

Amazon.com

(AMZN) and other companies with large server farms.

Apple

(AAPL) recently announced the first MacBook Air and MacBook Pro laptops with in-house designed processors based on Arm technology.

“With silicon being a fundamental part of the technology, we continue to invest in our own capabilities in areas such as design, manufacturing and tools, while encouraging and strengthening partnerships with a wide range of chip suppliers. Microsoft spokesman Frank Shaw said in a report.

Neither Intel nor AMD immediately responded to a request for comment.

Patrick Moorhead, analyst at Moor Insights & Strategy, noted that there was “fierce competition” in the cloud infrastructure market, adding that he would not be surprised by a decision by Microsoft to catch up with Amazon Web Services. “Silicon is strategic, not a commodity, and the industry has finally woken up,” he added.

Intel fell 6.3% to $ 47.46 on Friday, 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 [email protected]