Qualcomm Inc., the biggest supplier of chips used in
smartphones, said it would enter the market for chips used in
server systems.
The company confirmed the long-expected move during a meeting
with analysts in New York.
Qualcomm, which uses processor technology licensed from ARM
Holdings PLC, follows a handful of other ARM chip suppliers that
are trying to offer server chips.
"We are engaged with customers," said Steve Mollenkopf,
Qualcomm's chief executive. "It will take us a while to build this
business, but we think it is an interesting opportunity going
forward."
He didn't disclose specific product plans.
Intel Corp., which uses a technology called x86, dominates the
market for chips used in servers. Advanced Micro Devices Inc.,
which uses the same technology, has lately accounted for less than
3% of unit shipments of such chips.
Companies that make and buy servers have long expressed a desire
for alternatives to Intel's chips, singling out ARM technology for
features that include low power consumption. But the arrival of
ARM-powered servers has taken longer than expected, in part because
some suppliers didn't initially offer the 64-bit capabilities that
server software often requires.
Most of the interest in servers based on ARM chips comes from
operators of big websites, which can tailor their servers and data
centers to handle specific workloads, Mr. Mollenkopf said.
Qualcomm showed a video quoting Jay Parikh, Facebook Inc.'s vice
president of infrastructure engineering, expressing excitement at
the prospect of Qualcomm joining its potential suppliers of server
chips. "Qualcomm-based ARM servers gives us the ability to rethink
the way that we have built certain parts of our infrastructure," he
said.
The social network has previously expressed interest in
ARM-based options.
Mr. Mollenkopf estimated the chip market Qualcomm is targeting
could generate $15 billion in revenue by 2020.
Other companies that have disclosed plans for ARM server chips
include Applied Micro Circuits Corp., Advanced Micro Devices Inc.
and Cavium Inc. Hewlett-Packard Co. in September began selling
servers powered by Applied Micro's chips under an effort called
Project Moonshot.
Patrick Moorhead, an analyst with Moor Insights Strategy, said
Qualcomm may lack some technologies in fields, such as high-speed
networking, that are needed in servers. But Qualcomm sells chips in
much higher volumes than the other ARM-based entrants, giving it
major advantages, he said.
"Clearly they are the largest and most capable of being able to
do something in this area," Mr. Moorhead said.
Qualcomm executives touched on many other topics during the
analyst meeting, including an antitrust investigation in China.
They didn't disclose new details about the investigation, but
expressed confidence Qualcomm will put the matter behind it in
2015.
The company projected its average annual revenue growth rate at
8% to 10% over the next five years, adding that it expects earnings
per share to grow faster than revenue. Qualcomm shares recently
were trading at $70.81, down 1.67%.
Write to Don Clark at don.clark@wsj.com
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