An interesting story a few days ago from our pals Cade and TPM at The Register put forward some interesting theories about how Google’s activities and acquisitions of companies and talent might add up to the searcher building its own server chip. (Their story is here.)

Plausible? Yeah, I think it might be. We’re not talking about a chip designed to compete with the highly sophisticated Xeon or Power processors. But doing their own customized ARM implementation? It could make a lot of sense, given Google’s scale and internal needs.

As noted in the story, it’s estimated that Google has more than 1.8 million servers – which is far more than almost any other commercial company – and their box count is only going to expand from there. With that scale, even minor increases in efficiency can add up to huge dollars. Tim and Cade go through the reasoning in their well thought-out (and grammatically impeccable) article.

For my part, I’m wondering about implications. The business of designing and producing processors (and any other computing component) is a volume game: the more volume, the lower the cost of production and the larger base over which to amortize development costs.

Google would farm out production, of course; you won’t see them building their own fab facilities. It minimizes their upfront investment and cuts production time.  There’s enough slack capacity out there to give Google both primary and secondary supplier options.

As for the costs involved, ARM chips – even customized ones – can be turned out in huge quantities at very low cost. Google could consume quite a bit of volume just satisfying their own demand – and even build themselves out a bit more in order to bulk up their cloud computing capacity as well.

Rank speculation? Maybe. But it could pencil out, business-wise, assuming that the Google take on ARM can churn out a reasonable amount of work per watt and still run cool enough to be tightly packed together. Any ARM gurus out there want to comment?