Qualcomm is trying to get in again, people familiar with the matter sayServer Processor Market, betting that companies can use the $28 billion (about 190 billion yuan) industry to reduce their reliance on smartphones. According to Qualcomm’s financial report data for the last fiscal year,Mobile phone chips account for half of Qualcomm’s revenue, far higher than the second-ranked licensing business (19%)。
But this time, Qualcomm’s foundation is thicker. Last year, Qualcomm acquired chip startup Nuvia. Qualcomm is looking for customers for one of Nuvia’s products, according to people familiar with the matter. Amazon’s cloud computing business AWS, one of the world’s largest buyers of server chips, has agreed to study the performance of Qualcomm’s chips.
Mobile phone chips account for half of Qualcomm’s revenue
Shares of Qualcomm were up nearly 2% as of Thursday’s close. As of Wednesday, Qualcomm stock had fallen 19% this year. Not only Qualcomm, but chip stocks have suffered widespread losses this year.
first attempt failed
This isn’t the first time Qualcomm has sought to break into the server chip market. Four years ago, Qualcomm worked to develop processors for data center servers, breaking Intel’s monopoly on the lucrative market.
At the time, Qualcomm’s server chip division had been trying to bring ARM’s technology to the server core chip market. ARM is one of Intel’s only rivals in semiconductor design, and its architecture is primarily used in products that use less power, such as smartphones.
In this high-end computing market, a single chip sells for thousands of dollars. For years, chipmakers have struggled to supply server processors to owners of large data centers, such as Google and Amazon Web Services, in an attempt to break into an industry where Intel holds 99 percent of the market.
Servers process data in corporate networks and are the backbone of the Internet. In terms of shipments, the market size of servers is far smaller than that of mobile phones and PCs. But chipmakers are able to charge high prices for server chips, making the market attractive.
Qualcomm has been selling server chips “Centrq 2400” based on ARM technology since 2017.SamsungOEM. At the time, Qualcomm claimed that the Centrq 2400 was superior to Intel’s Xeon Platinum 8180 processor from a power efficiency and cost perspective. At the server chip series conference held by Qualcomm in November 2017,MicrosoftWaiting for potential customers to take the stage to express their interest in the product. But Qualcomm has remained mum on the chip’s progress since then.
Qualcomm launched the Centrq 2400 server chip
At that time, Qualcomm also suffered an accident. November 2017,Broadcom suddenly offers to buy Qualcomm for $103 billion, Qualcomm was caught off guard. After some battles, the hostile takeover case was finally stopped by then-President Trump because it was a threat to national security.
Qualcomm sought to cut costs and reassure investors after the acquisition dispute ended. Qualcomm’s then-CEO Steve Mollenkopf said on a conference call that Qualcomm was focused on cutting spending in non-core product areas.
As a result, in May 2018, foreign media reported that Qualcomm was studying whether to close the server chip division or find a buyer for it. Qualcomm’s first foray into the server market failed. For Qualcomm at the time, closing the server chip division would save the company design costs, but it also meant the company gave up efforts to reduce its reliance on a slowing mobile phone chip market.
Second entry into the palace, what are the odds?
Interestingly, Ammon, then president of Qualcomm, denied giving up the server chip business. At the time, Anmon happened to be in charge of Qualcomm’s server chip division. He said at the time that Qualcomm had no plans to abandon its data center goals and that despite layoffs, the server chip division would function normally. This paved the way for his second foray into the server business.
Qualcomm CEO Ammon
This time, Qualcomm has Nuvia, which is equipped withapplechip designers from other companies. Ammon bought Nuvia in 2021 for about $1.4 billion. He said Nuvia would help revive Qualcomm’s high-end chips for smartphones and PCs. However, Nuvia was founded as a technology provider for the server industry.
Qualcomm’s return to the server business will require the company to rebuild trust among potential customers it last pursued. The industry has also changed dramatically over the past few years. Amazon develops its own chips for servers, but it also buys chips from other suppliers. Startups such as Ampere Computing have also made progress, winning contracts from customers such as Microsoft.
Still, the potential rewards could be huge. If it successfully enters the server chip field, Qualcomm will have more expensive chips to sell. Currently,Qualcomm’s mobile phone chips are usually priced in the tens of dollars. In contrast,The highest-end server processors cost more than $10,000 per chip。
Last year, total spending on cloud computing infrastructure was $73.9 billion, up 8.8 percent year-on-year, according to IDC, a well-known research firm. The three cloud service giants Amazon, Google and Microsoft use these facilities to process data around the world.
Bloomberg Industry Research analyst Mandeep Singh noted,Data center processors alone generate $28 billion in annual revenue. “Qualcomm’s re-entry into the ARM server market extends its reach in the hottest segment of the semiconductor industry,” Singh said in a note Thursday.
Cracks in Intel’s reign
Owners of large cloud data centers have long relied on Intel Corp. for server chip technology, but they are also increasingly embracing processors designed with ARM architecture. ARM is an important partner of Qualcomm in the field of mobile phone chips.
ARM-based chips have ruled the mobile phone world, and one of its big advantages is that it doesn’t drain battery life. Now, in the data center space, power consumption has also become a more pressing issue.As server farms expand and consume staggering amounts of power, data center operators want more efficient chips。
Amazon has addressed this need by developing its own ARM server chips. The e-commerce giant has launched multiple generations of its Graviton processor line and touts its performance to customers.
However, Amazon is still using Intel,AMDand Nvidia chips. This allowed Qualcomm to see an opportunity to carve out market segments among these suppliers.
For Intel, Qualcomm’s latest move will bring more competition to an industry it once dominated. Intel has been working hard to improve its technology and manufacturing capabilities after being eroded by self-developed chips from companies such as AMD and Amazon.