Qualcomm Takes Aim At Intel -- WSJ
December 08 2016 - 3:02AM
Dow Jones News
By Don Clark
SAN JOSE, Calif. -- Qualcomm Inc. unveiled a chip it plans to
sell for server systems, attacking Intel Corp.'s most lucrative
stronghold by employing one of that company's longtime tactics.
The San Diego-based company said its new Centriq 2400 processor
is shipping in sample quantities to be tested by big web services,
the server buyers that lately shape many technology choices in
Silicon Valley. The product is expected to be available broadly in
the second half of 2017.
Servers are an attractive market for chip makers because their
processors command higher prices and profit margins. At Intel, such
chips accounted 29% of revenue but 47% of operating profit in the
latest quarter.
Qualcomm is the biggest supplier of processors and wireless
communication chips for smartphones. It is keeping mum on many
details of the Centriq 2400, a long-awaited entry amid a field of
companies looking to take advantage of ARM Holdings PLC chip
designs -- which are used in most mobile phones -- for use in
servers.
Qualcomm executives said the ARM-based chip, which they
demonstrated in prototype servers at a briefing here, would be
"competitive" with the speed of Intel's Xeon server chips and
superior in terms of energy efficiency.
Taking a page out of Intel's playbook, Qualcomm said the Centriq
2400 uses a new production process that creates transistors with
features measured at just 10 nanometers, or billionths of a meter.
Smaller transistors allow more functions to be packed on each piece
of silicon; Qualcomm said the new chip will have up to 48 processor
cores, compared with a maximum of 24 for Intel server chips.
Leading the transition to a new production process is an Intel
specialty. Where Qualcomm relies on partners to fabricate its
chips, Intel has long introduced manufacturing methods developed in
its own factories ahead of rivals. It usually starts by making
high-volume PC chips using each new technology, using its latest
process to produce server chips considerably later, said Nathan
Brookwood, an analyst at Insight 64.
Intel has said it doesn't expect to deliver any 10-nanometer
chips until the second half of 2017, with products for servers not
likely until sometime in 2018, Mr. Brookwood said.
Qualcomm plans to ship a 10-nanometer chip for mobile phones in
the first half of 2017, followed later the same year by the server
version.
Qualcomm is "changing the whole paradigm," Mr. Brookwood said:
It is using the latest production technology to produce server
chips, and it is doing so a relatively short time after the first
fruits of that technology have arrived.
Still, Intel's advantages are daunting. It accounts for nearly
100% of chips sold using the so-called x86 instructions that are a
foundation for nearly all commercial software. The x86 technology
was used in 99.3% of all servers sold in the first three quarters
of 2016, the research firm International Data Corp. estimated.
Advanced Micro Devices Inc., which also uses the x86
instructions, is expected to counterattack this year with a new
server chip dubbed Zen.
Although x86 and ARM chips employ different instruction sets,
AMD's entry is likely to increase the headwinds for Qualcomm and
other users of ARM technology, several of which have fielded server
chips already but haven't made much headway.
"There has been a lot of hype about ARM in the data center, but
very few deployments," an Intel spokesman said, while adding that
the company operates in "a highly competitive market and take all
competitors seriously."
One issue is that switching to ARM-based servers in many cases
requires software changes that many customers are unwilling or
unable to make, Mr. Brookwood said. But the biggest web companies,
such as Google Inc. and Facebook Inc., have the ability to modify
their software and an incentive to encourage chip makers to compete
on technical features and price.
"Choice is a good thing for them," said Anand Chandrasekher, the
senior vice president and general manager who has headed Qualcomm's
server chip effort for four years. The web companies want to
"accelerate innovation into the marketplace," he said.
Write to Don Clark at don.clark@wsj.com
(END) Dow Jones Newswires
December 08, 2016 02:47 ET (07:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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