Microsoft Set To Receive Arm-Based PC Chip Developed By MediaTek To Challenge Intel's Market Dominance: Report

Taiwanese chip design giant MediaTek is reportedly working on an Arm-based personal computer chip for Microsoft Corp MSFT. This move could potentially challenge Intel Corp INTC’s long-standing dominance in the PC market.

What Happened: The new chip, designed by MediaTek, will be compatible with Microsoft’s Windows operating system. This development aligns with Microsoft’s recent unveiling of a new generation of laptops featuring Arm-based chips, designed to support the future of consumer computing, particularly artificial intelligence applications, Reuters reported on Wednesday, citing three people familiar with the matter.

Microsoft’s decision to optimize Windows for Arm could pose a threat to Intel’s market dominance. The MediaTek chip is expected to be launched next year, following the expiration of Qualcomm Inc.’s QCOM exclusive deal to supply chips for laptops.

The MediaTek chip is based on Arm’s ready-made designs, which significantly speeds up the development process.

Microsoft and MediaTek did not immediately respond to Benzinga's request for comment.

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Why It Matters: Microsoft’s focus on AI is not new. The company has been making significant strides in AI technology, including the introduction of an isolated AI model for U.S. intelligence agencies to analyze classified data, the launch of a new AI language model to compete with Google and OpenAI, and the introduction of new AI-powered features at its annual Build developer conference.

With the development of this new chip, Microsoft is further solidifying its position in the AI space and potentially reshaping the PC market. This move also aligns with Microsoft’s recent investment in Touchcast Inc., a startup specializing in caching generative AI queries, to enhance AI deployment.

It is yet to be confirmed whether Microsoft has approved MediaTek’s PC chip for the Copilot+ Windows program. This initiative comes after Microsoft granted Qualcomm an exclusivity arrangement to develop Arm-based Windows-compatible chips until 2024.

Price Action: Microsoft Corp closed at $432.68 on Tuesday, up 1.12% for the day. In after-hours trading, the stock rose an additional 0.14% to $433.30. Year to date, Microsoft shares have increased by 16.67%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote