Qualcomm Is Plotting a Return to Server Market With New Chip

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Qualcomm Inc. is taking one other run at the marketplace for server processors, in response to folks acquainted with its plans, betting it will probably faucet a fast-growing business and reduce its reliance on smartphones.

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(Bloomberg) — Qualcomm Inc. is taking one other run at the marketplace for server processors, in response to folks acquainted with its plans, betting it will probably faucet a fast-growing business and reduce its reliance on smartphones.

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The corporate is in search of prospects for a product stemming from final yr’s buy of chip startup Nuvia, in response to the folks, who requested to not be recognized as a result of the discussions are personal. Amazon.com Inc.’s AWS enterprise, one of many greatest server chip consumers, has agreed to try Qualcomm’s choices, they mentioned.

Representatives for Qualcomm and Amazon declined to remark. 

Qualcomm gained as a lot as 2.9% to $152.91 in New York buying and selling after Bloomberg reported the information. The shares had been down 19% this yr via Wednesday, a part of a broader slide for chip shares. 

Chief Govt Officer Cristiano Amon is attempting to show Qualcomm right into a broader supplier of semiconductors, slightly than simply the highest maker of smartphone chips. However an earlier push into the server market was deserted 4 years in the past underneath his predecessor. On the time, the corporate was attempting to chop prices and placate traders after heading off a hostile takeover by Broadcom Inc.

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This time round, Qualcomm has Nuvia, staffed with chip designers from corporations resembling Apple Inc. Amon, who acquired the enterprise for about $1.4 billion in 2021, has mentioned that its work will assist revitalize Qualcomm’s high-end choices for smartphones. However Nuvia was based as a supplier of expertise for the server business.

The marketplace for cloud computing infrastructure — the sort of tools that Amazon, Google and Microsoft Corp. use to whisk knowledge around the globe — generated $73.9 billion final yr, in response to analysis agency IDC. That was up 8.8% from 2020. 

The homeowners of large cloud knowledge facilities have lengthy relied on Intel Corp.’s chip expertise for his or her servers. However they’re more and more embracing processors that use designs from Arm Ltd., a key companion in cellphone chips for San Diego-based Qualcomm.

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Arm designs are already dominant in cellphones, the place they’re prized for not draining battery life. Now energy consumption has grow to be a extra urgent difficulty within the knowledge heart world as effectively. As server farms unfold — and suck up staggering quantities of electrical energy — corporations need extra environment friendly chips.

Amazon has addressed this want by constructing its personal chips based mostly on Arm designs. The e-commerce large has created a number of generations of its Graviton processor line and touts its efficiency to prospects.

However Amazon additionally nonetheless makes use of chips from Intel, Superior Micro Units Inc. and Nvidia Corp. — and Qualcomm sees a chance to carve out a distinct segment amongst these suppliers.

The final time it made such an try was 2017, when Qualcomm started promoting an Arm-based server chip referred to as the Centriq 2400. It relied on Samsung Electronics Co. to fabricate the merchandise and mentioned they outperformed Intel’s Xeon processors in vitality effectivity and price. On the public introduction of the server chip line in November of that yr, potential prospects resembling Microsoft took to the stage to voice their curiosity within the providing.

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However lower than a yr later, the corporate’s management started shuttering the challenge. Former Intel government Anand Chandrasekher, who had led the hassle, left Qualcomm.

For Intel, Qualcomm’s newest transfer would carry but extra competitors to an business it as soon as dominated. The corporate has been racing to bolster its expertise and manufacturing after shedding market share to AMD and homegrown chips like Amazon’s.

For Qualcomm, a profitable push into server chips would imply it has a a lot bigger-ticket merchandise to promote. The corporate’s cellphone choices are usually priced within the tens of {dollars}. Server processors can price tons of of {dollars}.

(Updates with share response in fourth paragraph.)

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