Exclusive-MediaTek designs Arm-based chip for Microsoft's AI laptops, say sources

FILE PHOTO: MediaTek chips are seen on a development board at the MediaTek booth during the 2015 Computex exhibition in Taipei, Taiwan, June 3, 2015. Computex, the world's second largest computer show, runs from June 2 to 6. REUTERS/Pichi Chuang/File Photo

TAIPEI/SAN FRANCISCO (Reuters) -Taiwanese chip design giant MediaTek is developing an Arm-based personal computer chip that will run Microsoft's Windows operating system, according to three people familiar with the matter.

Last month, Microsoft unveiled a new generation of laptops that feature chips designed with Arm Holdings tech, which provide enough horsepower to run the artificial intelligence applications that executives said were the future of consumer computing. The MediaTek chip is geared toward this effort.

The software company's plans take aim at Apple which has released its own Arm-based chips for Mac computers for roughly four years. And Microsoft's decision to optimize Windows for Arm could threaten Intel's longstanding dominance in the PC market.

MediaTek and Microsoft declined to comment.

MediaTek's Taiwan-listed shares closed up 2.4% on Wednesday, outperforming the broader index's 1.2% gain.

The MediaTek PC chip is set to launch late next year after Qualcomm's exclusive deal to supply chips for laptops expires, two of the people said. The chip is based on Arm's ready-made designs, which can significantly speed development because less design work is needed using ready-made, tested chip components.

It was not immediately clear whether Microsoft has approved MediaTek's PC chip for the Copilot+ Windows program.

Executives at Arm have said one of its customers used the ready-made components to build a chip in roughly nine months for a design that is already complete, which MediaTek's is not. For experienced chip design businesses, advanced chips typically take considerably more than a year to construct and test, depending on the complexity.

In 2016, Microsoft tapped Qualcomm to spearhead moving the Windows operating system to Arm's underlying processor architecture, which has long powered smartphones and their small batteries. Microsoft granted Qualcomm an exclusivity arrangement to develop Arm-based Windows-compatible chips until 2024, Reuters reported last year.

Because the Qualcomm exclusivity arrangement with Microsoft is expiring, other designers have opted to build chips to help power Microsoft's latest push to use Arm designs. For decades, Windows machines have relied on chip architecture made by Advanced Micro Devices and Intel.

Nvidia and AMD are working on Arm designs for Windows machines, Reuters reported last year. The Nvidia effort for its PC chip involves help from MediaTek, according to a person familiar with the matter. The MediaTek effort for a PC chip is separate from its collaboration with Nvidia, two of the people said.

(Reporting by Max A. Cherney in San Francisco; Additional reporting by Ben Blanchard in Taipei; Editing by Kenneth Li, Josie Kao, Stephen Coates and Rashmi Aich)

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