Qualcomm To Refocus Server Chip Business On Large Cloud Players

A Qualcomm executive has denied reports that the largest maker of chips in mobile phones, is seeking to exit the server chip business.

It comes after Bloomberg reported last month that Qualcomm was exploring whether to sell or shut down the server chip unit.

Qualcomm had first announced its intention to build server chips four years ago in 2014, when it revealed it was entering the crowded ARM-based server chip business.

Server chips

And then in late 2016 it began allowing selected customers to try out its ‘world first’ 10nm (nanometre) server processor, aimed firmly at the data centre market.

This put Qualcomm into direct competition with Intel, which dominates that market and makes half of its revenue from server and data centre chips.

The Bloomberg report stated that Qualcomm was exploring whether to sell or shut down the server chip unit.

But this has now been denied by Qualcomm’s president Cristiano Amon, who oversees the chip division.

Amon told Reuters that while it is making staff reductions in the unit, it intends to keep operating it, albeit with a narrower focus on large internet companies in the United States and China.

“We are not looking at strategic options. We are not selling. We are still focused on it,” Amon told Reuters.

However Qualcomm declined to say whether it had considered selling the server chip unit at some point in the past.

Cost cutting

The company instead pointed to an April earnings call in which CEO Steve Mollenkopf said Qualcomm was considering cost-cutting options in areas that are not central to Qualcomm’s business, which overwhelmingly comes from selling chips and licensing technology for mobile phones.

Amon then told Reuters that the server chip business will be rolled into Qualcom’s Qualcomm CDMA Technologies unit, which designs and sells mobile phone chips. This move is apparently to “gain cost efficiencies.”

Going forward, the restructured server chip unit will focus on large cloud computing players, including big name Chinese firms such as Alibaba, Tencent and Baidu.

The reason for Qualcomm targetting big cloud players, is that they tend to write their own internal software, which can customised for Qualcomm’s chips. Small cloud player would tend to struggle to adapt off-the-shelf data centre software, as it is mostly designed to run on Intel’s x86 chips.

“It’s very clear to us that the ARM opportunity is focused on a few players where you don’t have the software x86 barrier to entry,” Amon told Reuters.

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