Microsoft is developing custom Arm-based server processors designed specifically for its own datacenter infrastructure.

Microsoft is reportedly designing its own homegrown server and desktop-grade processors using CPU blueprints licensed from Arm, according to Bloomberg. The effort is described as a "major commitment" by sources familiar with the matter. One family of chips will be tailored for servers within Azure data centers, and a second family is being considered for Microsoft's Surface devices. The server-grade processors are more likely to make it into production than the PC-level ones, which are described merely as an exploratory project.

This development follows a report in The Register from more than three years ago in which Microsoft pledged to power more than half of its cloud data center capacity with 64-bit Arm-compatible servers. At that time, top Azure engineer Leendert van Doorn stated: "We feel Arm servers represent a real opportunity and some Microsoft cloud services already have future deployment plans on Arm servers." He further explained that "we found that [Arm servers] provide the most value for our cloud services, specifically our internal cloud applications such as search and indexing, storage, databases, big data and machine learning. These workloads all benefit from high-throughput computing."

Initially, Microsoft had relied on Qualcomm to deliver 64-bit Arm-compatible Centriq server processors, but these were ultimately cancelled. Now Redmond is advancing its own efforts with support from semiconductor partners. Microsoft PR vice president Frank Shaw stated: "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."

Arm has been gaining momentum in the server market through its Neoverse designs, which can pack racks with more cores-per-socket than x86 rivals and are manufactured at TSMC's fabs. Startup Ampere offers competitive Neoverse-based Arm server chips, and Amazon rents out Neoverse-powered Graviton2 servers. Microsoft is suspected to be eyeing similar Neoverse cores for Azure.

On the Surface side, Microsoft has struggled with Windows on Arm regarding software compatibility and market interest, previously relying on Qualcomm for silicon. The Surface Pro X currently uses the SQ1 and SQ2, a Qualcomm Snapdragon 8CX customized for Microsoft. Today's report suggests Microsoft may be considering developing its own system-on-chip for Windows laptops, bypassing Qualcomm entirely. Apple's success with its homegrown desktop-grade Arm-compatible M1 processors may have influenced this thinking.