AMD and Nvidia are allegedly making ARM chips for PCs, and what it means for the industry

Rumors are an everyday thing for tech giants like AMD and Nvidia, but Reuters‘ report that the two companies are jumping into ARM CPUs for Windows PCs is a big deal. It’s almost completely new territory for AMD and Nvidia, neither of which have ever made ARM-based chips for PCs. It’s also just as big for Microsoft, which is apparently spurring on the CPU and GPU designers into making these processors.

At the same time, there are also implications for the companies that aren’t directly involved, chiefly Intel, Qualcomm, and Apple. The introduction of a new class of CPUs for PC made by AMD and Nvidia could seriously shake up the computing landscape and make it unrecognizable some years from now, for better or for worse.

What would it mean for AMD and Nvidia to make ARM chips?

While Reuters went into good detail about the general goals of AMD, Nvidia, and Microsoft in the wider semiconductor and computer industry, there weren’t a ton of specifics beyond making ARM chips for Windows on ARM PCs. Although many PC enthusiasts probably got excited about the prospects of brand-new desktops and laptops powered by both AMD and Nvidia using the ARM architecture, it probably will only be laptops (or mobile devices in general) for a couple reasons.

For one, the desktop is not a lucrative market. It’s been in a steady decline for years, while the laptop market offers both growth and high margins. In AMD’s case, putting ARM chips on the desktop would undoubtedly compete with its own x86 Ryzen CPUs, which is also a pretty bad idea. As for Nvidia, it would have to compete with two corporations with decades of experience, which is tough to say the least.

The other reason is that Microsoft is particularly vulnerable in laptops because of Apple. Ever since the company launched the M1, Apple’s PCs have been incredibly potent, but it’s really the MacBooks rather than the Macs or Mac Minis that are threatening to Microsoft. Desktop PCs are primarily for high horsepower computing and gaming, and Macs just don’t compare. However, MacBooks boast unique features, great efficiency, and lots of battery life.

While it’s impossible at this stage to verify the veracity of Reuters‘ report, if it is true then we’re probably looking at laptops and maybe tablets. Anything to do with gaming, like desktops and handheld gaming PCs such as the Asus ROG Ally are almost certainly not going to see any of these ARM chips. It really doesn’t make any sense for AMD or Nvidia to develop an ARM chip made for PC gaming, which is centered around x86 software.

How the fortunes of AMD, Nvidia, and Microsoft could shift with ARM CPUs

Even if AMD and Nvidia are just sticking to MacBook-like laptops and non-gaming mobile devices, it would still constitute a massive shakeup in the laptop market, one we haven’t really seen since perhaps the first MacBook launched. This is a potentially large and untapped market for the three tech/semiconductor corporations.

There’s nothing fundamentally different between using an ARM CPU or an x86 processor, but the success story of Apple’s M1 lends lots of credibility to the idea that ARM is the ideal architecture for low-power, efficient chips. This is a market that so far only Apple and Qualcomm (Microsoft’s exclusive Arm partner until 2024) have entered into, and it’s looking like consumers have a big appetite for efficient and decently powerful ARM laptops.

AMD and Nvidia are uniquely prepared to tap into this potentially underserved and profitable segment of the laptop market. Both companies have years of experience in making mobile processors featuring both CPU and GPU cores, and both have experience developing ARM CPUs (AMD had planned to launch the ARM-based K12 in 2017 but silently canceled it).

But most importantly, both are already crucial players in Windows PCs. A laptop chip is not just a bigger version of a smartphone chip or a smaller version of a datacenter CPU. Even companies that have lots of experience making processors for one market can struggle to compete in another, even if it’s a similar market; just ask Intel about its smartphone CPUs.

If everything pans out as AMD, Nvidia, and Microsoft hope, then all three companies could become even more wealthy, which is a bit hard to imagine considering they’ve all seen massive growth in the past decade. But if this venture doesn’t pan out, it could be the end of Windows on ARM laptops and deal a serious blow to AMD, Nvidia, and Microsoft financially. The stakes here are really high, but not just for these three companies.

This is also a big deal for Apple, Qualcomm, and Intel

Source: Apple

It’s also important to consider the corporations that aren’t part of Microsoft’s initiative for Windows on ARM, and I primarily mean Apple, Qualcomm, and Intel. Depending on how successful AMD and Nvidia are, these three companies could have to deal with tough competition and might even have much to lose.

It’s obvious why Apple wouldn’t like competing with well-made ARM CPUs from AMD and Nvidia. The M1 ushered in a revival for Apple’s PC business, which had been in a slump for the tail end of the Mac’s Intel era. Now, Apple’s PC presence is growing so fast that it went from 8.6% of PC market share in July to 10.6% in October. To be clear, that’s July and October this year.

This would be all at an end if AMD and Nvidia’s ARM CPUs are really good, or even just sort of decent. Apple’s M2 is much more efficient than current generation CPUs from both Intel and AMD, and that’s certainly a key factor in Apple’s great PC sales. If the competition suddenly became more performant and efficient, Apple’s crazy growth in PC might just stop.

Qualcomm is in a slightly different position, and the important part is that it would no longer be the exclusive partner for Windows on ARM. On the surface, this sounds like a really bad thing for Qualcomm since more competition is usually bad, but AMD and Nvidia’s chips would also help grow the Windows on ARM ecosystem, which could be a net positive for Qualcomm.

Of course, Qualcomm would give pretty tough competition for Apple, AMD, and Nvidia. Its upcoming Snapdragon X Elite measures up favorably compared to the M2, though the M3 is on the way and may complicate things for Qualcomm. As long as Qualcomm isn’t in dead last, AMD and Nvidia’s entry into the market might be a net gain.

Finally, there’s Intel, which is in a similar position as Apple. The key difference is that Intel’s CPUs are part of the Windows ecosystem on the x86 side. The company is also already competing with both AMD and Nvidia, especially the former, which has been eager to knock Intel down a notch for over two decades now. It really seems like Intel can only lose here.

Except, Intel could benefit from manufacturing. Intel and Arm signed a deal for making ARM chips at Intel’s foundries, and while it’s hard to imagine AMD partnering with Intel, Nvidia may. Nvidia CEO Jensen Huang has publicly stated his interest in fabbing GPUs at Intel, and that opens the door for Intel-made Nvidia CPUs too. That way, Intel could reap some of the rewards of this whole scheme.

It’s all up in the air, but if it’s happening, it’ll be big for the industry

We still don’t know much beyond what Reuters reported, but if it’s accurate, then we’ll know this will be a big undertaking for AMD, Nvidia, and Microsoft. Whether they succeed or fail, the ramifications will be great for the market, the companies involved, and the users who may or may not want to buy laptops powered by ARM chips and Windows.

At the same time, it’s also a big moment for Apple, Qualcomm, and Intel. While Apple is straight-up a competitor and stands to lose whatever AMD, Nvidia, and Microsoft gain, Qualcomm and Intel don’t have to be in the same position. Both companies stand to gain from an expansion of the Windows on ARM ecosystem, as Qualcomm wants to expand its PC presence and Intel has its eyes on being the new TSMC.