Exclusive: Nvidia is making Arm-based PC chips in a major new challenge to Intel

Oct 23 (Reuters) – NVDA (NVDA.O) dominates the market for artificial intelligence computing chips. Now this comes after Intel’s old bastion of PCs.

Nvidia has quietly begun designing central processing units (CPUs) that would run Microsoft’s Windows operating system (MSFT.O) and use technology from Arm Holdings (O9Ty.F), two people familiar with the matter told Reuters.

The AI ​​chip giant’s new pursuit is part of Microsoft’s efforts to help chip companies build Arm-based processors for Windows PCs. Microsoft’s plans target Apple, which has nearly doubled its market share in the three years since launching its in-house Arm-based chips for its Mac computers, according to preliminary third-quarter data from research firm IDC.

Advanced Micro Devices (AMD.O) also plans to make chips for personal computers using Arm technology, according to two people familiar with the matter.

Nvidia and AMD could sell PC chips by 2025, one of the people familiar with the matter said. Nvidia and AMD will join Qualcomm (QCOM.O), which has been making Arm-based chips for laptops since 2016. At an event on Tuesday that executives will attend Microsoft, including Vice President of Windows and Devices Pavan Davuluri, and Qualcomm plan to reveal more details about the flagship chip designed by a team of former Apple engineers, according to a person familiar with the matter.

Nvidia shares closed 3.84% higher, and Intel shares ended 3.06% lower after a Reuters report on Nvidia’s plans. Arm shares rose 4.89% at the close.

Nvidia spokesman Ken Brown, AMD spokesperson Brandi Marina, Arm spokesperson Christine Wray, and Microsoft spokesman Pete Wootton declined to comment.

The efforts of Nvidia, AMD and Qualcomm could shake up the personal computer industry, which has long been dominated by Intel but is under increasing pressure from Apple. Apple’s custom chips have given Mac computers better battery life and fast performance that rivals chips that use more power. Microsoft executives noticed how efficient Apple’s Arm-based chips were, including AI processing, and wanted to achieve similar performance, one of the sources said.

In 2016, Microsoft tapped Qualcomm to lead efforts to port its Windows operating system to Arm’s processor core architecture, which has long powered smartphones and their small batteries. Microsoft has granted Qualcomm an exclusive arrangement to develop Windows-compatible chips through 2024, according to two sources familiar with the matter.

The two sources told Reuters that Microsoft encouraged others to enter the market once the exclusivity deal expired.

“Microsoft learned from the 1990s that it didn’t want to depend on Intel again, and it didn’t want to depend on one vendor,” said Jay Goldberg, CEO of D2D Consulting, a financial and strategy consulting firm. “If Arm was really successful in the PC (chip) business, it would never allow Qualcomm to be the sole supplier.”

Microsoft is encouraging relevant chipmakers to build advanced AI features into the central processing units (CPUs) they design. The company envisions AI-enhanced software like Copilot becoming an increasingly important part of using Windows. To achieve this, chips from Nvidia, AMD, and others will need to dedicate on-chip resources to do so.

There is no guarantee of success if Microsoft and the chip companies continue with these plans. Software developers have spent decades and billions of dollars writing code for Windows that runs on what’s known as the x86 computing architecture, which both Intel and AMD use. Computer code designed for x86 chips will not automatically run on Arm-based designs, and the transition may present challenges.

Intel has also packed AI features into its chips and recently demonstrated a laptop running similar features to ChatGPT directly on the device.

Intel spokesman Will Moss did not immediately respond to a request for comment. AMD was previously reported to be entering the Arm-based PC market with chip-focused publication SemiAccurate.

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