• Fungible, a company in Santa Clara, California, has made a special chip that can take over these supporting tasks from a server’s central processing unit.
  • The company says its technology can make data centers run more efficiently and cut costs.

Microsoft Corp. recently announced that it has acquired Fungible Inc., a data center chip startup backed by venture capital.

No information was disclosed about how much the purchase would cost. Blocks and Files, on the other hand, said the deal is worth USD 190 million. Microsoft will use the technology from Fungible in the data centers that run its Azure cloud platform.

In addition to running applications, servers in a data center also do other tasks. They encrypt the network traffic coming from the apps they run to make it harder for hackers to get in. Together, network traffic is scanned for signs of a security breach, which helps make the best use of bandwidth.

Fungible, a company in Santa Clara, California, has developed a special chip that can take over these supporting tasks from a server’s CPU. The company’s chip is a data processing unit or DPU. Fungible says that putting encryption operations and other support tasks on a DPU instead of a server’s CPU frees up more computing power for applications.

The company says its technology can increase operational efficiency and cut costs. Also, Fungible promises to make server management easier during the process.

The company says that its DPU can improve the infrastructure of its servers and storage. The Fungible Storage Cluster is a flash storage system that uses Fungible’s DPU technology to compress data and run erasure coding algorithms. Erasure coding is a way to make sure that information is still accessible if something goes wrong with the hardware.

The company says that a single Fungible Storage Cluster system can do up to 13 million data input and output operations per second. The platform also promises to use less power than other products on the market.

Blocks and Files say that Microsoft thought about working with Fungible to make custom chips at one point. Later, the tech giant decided to buy the company instead of working with it. As a result of the deal, the employees of Fungible will join the data center infrastructure engineering group at Microsoft.

Girish Bablani, the corporate vice president of Azure Core, said, “Today’s announcement further signals Microsoft’s commitment to long-term differentiated investments in our data center infrastructure, which enhances our broad range of technologies and offerings, including offloading, improving latency, increasing datacenter server density, optimizing energy efficiency and reducing costs.”

In 2020, it was said that Microsoft Corp. wanted to make custom processors for its Azure Cloud platform. By buying Fungible, the company got access to its technology and chip design know-how. This could help its efforts to make better processors.

In the cloud market, Microsoft’s biggest competitors already use custom chips in their data centers. Amazon Web Services Inc. has many cloud instances that run on processors that were made in-house. In turn, Google LLC’s cloud business gives access to Cloud tensor processing units, custom chips that its engineers made to speed up AI workflows.

Microsoft bought Fungible just a few weeks after it bought another startup company that made data center hardware, Lumenisity Ltd. Lumenisity developed high-speed networking cables that connect systems in a data center with each other. The startup says its technology is 50% faster than the old fiber optic cables.