Applied Micro Issues Data Centre Challenge As Sales Slide

Applied Micro announces it is shipping microserver chips for data centres, in a bid to mount a stronger challenge to Intel and AMD in the server market.

The Sunnyvale, California, company made the announcement that it is shipping 64-bit ARM server ICs, but at the same time revealed disappointing first quarter results.

Microserver chips

Applied Micro is now shipping its new X-Gene “microserver” chips, based on ARM Holdings’ processor design, according Reuters. “We are very pleased to report that we have shipped initial production X-Gene units,” Applied Micro CEO Paramedh Gopi said. “Purchase orders continue to grow and backlog is building. The creation of the ARM 64-bit based server category is under way.”

“We experienced strong demand for our connectivity products while we saw a sharp decline in legacy PowerPC embedded products,” said Gopi. “The contributions of the base business continue to support our growth initiatives.”

The X-Gene portfolio is geared towards the data centre, and according to the company is ideally suited for enterprise-class cloud platforms. The microserver chip approach to the data centre has long been championed by AMD, after it acquired microserver maker SeaMicro in 2012.

The thinking is that microservers are more cost effective and energy efficient than Intel’s heavy duty server chips. It should be noted that Intel has also brought out its own energy efficient Atom-based System-on-a-Chip for the data centre to counter this.

But the chip giant remains unconvinced that ARM poses much of a threat to its server domination, despite its recent admission of the importance of the data centre market to its core earnings.

“While we don’t take any competition lightly, the much-hyped threat of ARM servers getting any significant market segment share any time soon has been vastly overplayed,” Intel spokesman Bill Calder told Reuters.

Disappointing Financials

The data centre move by Applied Micro comes after it disappointed Wall Street with its latest financial report.

In its first quarter ending 30 June, Applied Micro posted a net loss of $13m (£7.7m), compared to a net profit of $10.8m (£6.4m) in the same year-ago quarter.

Sales were also down after it posted revenues of $50.3m (£29.7m), down from $54m (£32m) a year-ago.

The results missed analyst expectations and sent shares in the company down 4 percent in last night trading.

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