According to a Bloomberg report, the operating system would target smartphones and tablets and mark a dramatic shift for Microsoft because of the company’s long term relationship with Intel.
A low-power OS based on ARM's blueprint would allow more companies to run Windows on their hardware, as ARM powers a majority of tablets and mobile devices.
Intel's chips, on the other hand, require a lot more power, so aren't as suited for battery-powered devices.
Bloomberg said that Microsoft's anticipated move is a response to the dominance of Apple's iPad in the tablet market.
But Intel could have tablet plans of its own. Earlier this month, reports suggested the company is planning its own tablet division, though nothing has been officially announced.