The company isn't saying, nor providing any specifics about its plans.
"We are actively engaged in designing the world?s best infrastructure," said Liz Markman, a spokeswoman for Google. "This includes both hardware design (at all levels) and software design."
Moving into chip design could take away revenue from Intel, which has counted on Internet companies to help drive processor sales.
By designing its own chips, Google would not have to pay some of the profit margin commanded by chip companies, this person said. But the much more important reason, this person said, is to create circuitry that is specifically designed to make Google's software run better than it can on general-purpose chips sold to many customers.
Google is also facing cost pressures as both the number of people conducting Web searches and the number of searches they do keep expanding.
Meanwhile, companies are racing to market with server chips based on technology licensed from ARM, the same design that powers most smartphones. They are hoping to offer chips that consume less power than the x86 designs sold by Intel and Advanced Micro Devices. However, AMD has announced plans to use ARM-based designs for the server-chip market.
In August, Google joined Nvidia and other companies in a group started by IBM that licenses technology used in data centers, including chips for servers.