Shulou(Shulou.com)11/24 Report--

According to reports in the morning of August 19, Beijing time, Qualcomm is trying to re-enter the $28 billion server processor market, thereby reducing its dependence on the smartphone market.

The company is looking for a customer for a product from chip startup Nuvia, which it acquired last year, the source said. Amazon AWS, one of the largest buyers of server chips, has agreed to investigate Qualcomm's products.

Qualcomm and Amazon declined to comment.

Qualcomm shares rose 2.9% to $152.91 in u.s. stock trading after the news. Share prices of companies in the chip industry have generally fallen this year. Qualcomm shares are down 19% this year as of Wednesday.

Cristiano Amon, Qualcomm chief executive, is trying to transform Qualcomm into a broader chip provider, not just smartphone chips. Qualcomm tried to enter the server market four years ago, but then chose to give up. At the time, Qualcomm tried to reassure investors by cutting costs after repelling a hostile takeover by Broadcom.

Nuvia, owned by Qualcomm, was founded as a technology provider for the server industry, and its employees include chip designers from Apple. Amon decided to buy Nuvia for about $1.4 billion in 2021. At the time, he said Nuvia's work helped develop Qualcomm's high-end smartphones and PC chips.

Qualcomm needs to re-establish trust with potential customers if it wants to re-enter the server chip industry. Great changes have also taken place in the server industry in the past few years. Amazon has developed its own server processors, but continues to buy chips from other suppliers. Startups such as Ampere Computing have also made progress, winning contracts from big customers such as Microsoft.

However, Qualcomm is also likely to get a lot in return. Successful entry into the server chip market means Qualcomm will be able to sell more expensive products. Qualcomm's mobile processors usually cost tens of dollars, but the most high-end server processors cost more than $10, 000 each.

Last year, industry investment in cloud infrastructure reached $73.9 billion, up 8.8 per cent from 2020, according to market research firm IDC. Companies such as Amazon, Google and Microsoft are developing this infrastructure to transmit data around the world.

Mandeep Singh, an analyst at Bloomberg Intelligence, says data center processors alone generate $28 billion in revenue a year. "the ARM server market is one of the bright spots in the chip industry, and re-entry into this market will expand Qualcomm's market participation," he said in a research report on Thursday.

Large cloud data centers have long relied on Intel's processor technology to run their servers, but these companies are also gradually embracing ARM processors. ARM is a key partner for Qualcomm handset processors.

Because of its low power consumption, ARM processor has occupied a dominant position in the smartphone market. Now, power consumption is also becoming a pressing problem in the data center industry. As the number of servers grows, servers consume more and more power, so the company wants more energy-efficient chips.

Amazon develops its own chips based on ARM design to meet this demand. Amazon's Graviton processors have been developed for several generations, and Amazon is introducing them to customers. However, Amazon still uses chips from Intel, AMD and Nvidia, and Qualcomm sees an opportunity to compete with these companies for the market.

The last time Qualcomm tried this was in 2018, when Qualcomm launched Centriq 2400, a server chip based on ARM design, and launched contract manufacturing through Samsung Electronics. Qualcomm said the processor is better than Intel Xeon in terms of energy efficiency and cost. On the public promotion of server chip products in November of that year, potential customers such as Microsoft spoke on stage and expressed their interest in Qualcomm products.

Less than a year later, however, Qualcomm's management decided to stop the project. Anand Chandra Seka (Anand Chandrasekher), a former Intel executive who led the work, also left Qualcomm.

For Intel, Qualcomm's latest move will bring more competition to the industry. Intel is also actively developing related technology and manufacturing capabilities after losing market share to companies such as AMD and Amazon.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.