With 132 cores, expanded cache, and 3nm manufacturing, the new chip is designed to consolidate enterprise workloads and deliver up to 40% cost savings.
Microsoft has unveiled the next generation of its Arm-based custom CPUs in the form of Cobalt 200 as part of its ongoing efforts to reduce dependency on x86-based instances and make its data centers more energy-efficient while offering better performance for cloud computing workloads.
Microsoft has been using Cobalt chips to power its own services, such as Teams and Defender, and also offers them to enterprise customers through virtual machines.
According to Microsoft, the second-generation custom chip offers better energy efficiency and 50% more performance than its predecessor, Cobalt 100, which was launched last year.
Compared to Cobalt 100, which has 128 cores and no cache memory to store frequently used data, the new chip comes with 132 active cores with 3MB of L2 cache per core and 192MB of L3 system cache.
Another architectural difference between Cobalt 200 and Cobalt 100 is the upgraded generation of manufacturing technology used: the predecessor’s 5nm versus Cobalt 200’s 3nm.
The better the manufacturing technology, the easier it is to improve transistor density, speed, and efficiency.
These architectural improvements underpin Cobalt 200’s claimed increase in performance, which, according to Stephen Sopko, analyst at HyperFRAME Research, will lead to a reduction in total cost of ownership (TCO) compared to its predecessor. As a result, enterprise customers can benefit from consolidating workloads onto fewer machines.
“For example, a 1k-instance cluster can see up to 30-40% TCO gains,” Sopko said, adding that this also helps enterprises free up resources to allocate to other workloads or projects.
Moor Strategy and Insights principal analyst Matt Kimball noted that the claimed improvements in throughput-per-watt could be beneficial for compute-intensive workloads such as AI inferencing, microservices, and large-scale data processing.
Some of Microsoft’s customers are already using Cobalt 100 virtual machines (VMs) for large-scale data processing workloads, and the chips are deployed across 32 Azure data centers, the company said.
With Cobalt 200, the company will directly compete with AWS’s Graviton series and Google’s recently announced Axion processors, both of which leverage Arm architecture to deliver better price-performance for cloud workloads.
Microsoft and other hyperscalers have been forced to design their own chips for data centers due to the skyrocketing costs for AI and cloud infrastructure, supply constraints around GPUs, and the need for energy-efficient yet customizable architectures to optimize workloads.
Cobalt 200 CPUs will be available in select Azure virtual machine families starting early 2026, with broader rollout planned later in the year, Microsoft said.
