Google (GOOG, GOOGL) has announced the development of a new custom-built server chip based on Arm Holdings (ARM) technology. The CPU dubbed "Axion" is a chip that the tech giant has designed in-house.

Yahoo Finance Tech Editor Dan Howley breaks down the details, discussing the use-cases for the new chip.

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Editor's note: This article was written by Angel Smith

Video Transcript

SEANA SMITH: Well, Google, announcing a new more affordable custom-built ARM-based server chip. Now, the processor will be available later in the year, showing a move to compete with the likes of Amazon and Microsoft in the cloud computing space. Yahoo Finance's Dan Howley is closely tracking the details on this announcement. Dan.

DAN HOWLEY: That's right, Seana. This is the Axion chip. It's a CPU rather than a GPU or even a TPU that we've seen some companies introduce on their own. Basically, what a CPU is it's-- well, the brains of a computer. And they're not really set up properly for AI acceleration, that's why we have GPUs and these TPUs tensor processing units. But they are used for everyday tasks. And so Intel is one of the largest CPU makers in the world, especially when it comes to data centers. And so this means that Google will essentially be competing with Intel to a degree by putting out its own CPU.

Now, NVIDIA also has its own CPU. They pair that with their Blackwell chips, as well as their Hopper chips as the Grace CPU. But this is Google's own. And just to give you some of the numbers that they're throwing out there. As far as overall performance, they say, it delivers up to 30% better performance than the fastest general purpose ARM-based instances available in the cloud today. Those are ARM-based chips that are also available, such as NVIDIA's Grace chip. And it says it has up to 50% better performance and 60% better energy efficiency than comparable current generation X86-based instances, essentially saying Intel without saying Intel.

That's what you would call an X86. And so they're basically kind of touting this energy efficiency and performance gain for their applications. And they say they're already using it in some of their own applications. They're using it for things like YouTube ads, BigQuery, blog store, Google Earth Engine. And so those are now running on these CPU chips that Google is building on their own.

SEANA SMITH: All right. Dan Howley, thanks so much for breaking that down for us. Again, we're seeing Google move on the news here in early market action.