Once the head of the pack in computer processors, Intel (NASDAQ:INTC) is coming under serious attack in its core business. Rival big tech companies are opting to develop their own chips, with the latest being mighty Microsoft (NASDAQ:MSFT). On Friday's news that Microsoft is doing the go-it-alone thing, Intel's stock fell by 6.3% on the day.
In a big "uh-oh" for Intel, various media outlets reported that Microsoft is developing proprietary chips to power the servers that undergird its considerable cloud services. According to Bloomberg, it's also considering the development of different processors that would be the brains of its Surface line of tablet PCs.
This closely follows last month's news that Apple (NASDAQ:AAPL) is also going proprietary. Apple confirmed this when it formally unveiled its latest offerings in the Mac line, which will eventually be powered by the company's home-brewed M1 chips.
Both tech giants remain tightly linked to Intel. The company's processors power a great many PCs with Microsoft's Windows operating system, to the point where such machines are often identified by the hybrid Wintel nickname. And Intel's chips have been the guts of Apple's computers for years, based on long-term agreements between the two companies.
Intel shareholders are right to be concerned; processors are crucial to the company's success. While it can probably withstand the looming departure of Apple, Microsoft is a mighty beast that could cause serious damage if it scales up with a proprietary chip.