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Microsoft has selected Xilinx as its FPGA supplier for Azure datacenters. The maker of programmable chips will supply co-processors for Azure across more than half of Microsoft’s cloud service. This is an important decision on Microsoft’s part as Xilinx replaces long-time Redmond partner Intel.

Previously, Intel’s Altera processor was the core chip for Azure through an exclusive contract. According to Bloomberg sources, Microsoft is not ready to officially announce the deal. Xilinx’ co-processors will help Azure datacenters accelerate functionality and relieve load on the main server processor.

While Microsoft has chosen Xilinx over Intel, the source says Redmond will continue to work with the company. That was confirmed by a Microsoft spokesperson, who declined to comment on the deal:

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“There has been no change of sourcing for existing infrastructure and offerings,” according to a Microsoft spokesperson.

In 2016, Microsoft discussed how it is integrating field-programmable gate arrays (FPGAs) into Azure. It was the first time where programmable gate array technology has been used for large scale cloud computing.

Since then, Microsoft expanded to hold the world’s largest deployment of FPGAs, with support in 15 countries and five continents. Microsoft benefits for FPGA chips because it can use fewer servers. Ultimately this would lead to more efficient and cost-effective datacenters and better results for users and customers.

Intel’s Loss is Xilinx’ Gain

How much of a hit Intel’s programmable chip business will take a hit from this decision remains to be seen. It will probably be significant considering Microsoft is a leader in FPGA deployment. Intel’s programmable chip division has been growing, with a 6% increase ($496 million in sales) during the third quarter.

As for Xilinx, this is a major contract as the company only makes this type of processor. The company has already been enjoying rapid growth, including a 19% revenue increase last quarter.

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