in the morning of August 19, Beijing time, it was reported that informed sources disclosed that Qualcomm was trying to enter the US $28 billion server processor market again, so as to reduce its dependence on the smartphone market.
It is reported that the company is looking for customers for a product of nuvia, a chip startup company acquired last year. As one of the largest buyers in the server chip market, Amazon AWS has agreed to conduct research on Qualcomm's products.
After the news was reported, Qualcomm shares rose 2.9% to US $152.91 in US stock market trading. This year, the share prices of Companies in the chip industry generally fell. As of Wednesday, Qualcomm's shares had fallen 19% this year.
Cristiano Amon, chief executive of Qualcomm, is trying to transform Qualcomm into a broader chip provider, not just a smartphone chip provider. Four years ago, Qualcomm tried to enter the server market, but then chose to give up. At that time, after repelling the hostile takeover of Broadcom, Qualcomm tried to appease investors by reducing costs.
Nuvia, a subsidiary of Qualcomm, was founded as a technology provider for the server industry. Its employees include chip designers from apple. Amon decided in 2021 to acquire nuvia at a price of about US $1.4 billion. At that time, he said that nuvia's work would help develop Qualcomm's high-end smartphones and PC chips.
If Qualcomm wants to re-enter the server chip industry, it needs to re-establish trust with potential customers. In the past few years, the server industry has also undergone tremendous changes. Amazon has developed its own server processor, but continues to purchase chips from other suppliers. Startups such as ampere computing have also made progress and won contracts with major customers such as Microsoft.
However, Qualcomm may also reap great returns. Successful entry into the server chip market means that Qualcomm will be able to sell more expensive products. Qualcomm's mobile phone processor usually costs tens of dollars, but the most high-end server processor costs more than $10000 each.
According to the data of market research company IDC, last year, the industry's investment in cloud computing infrastructure reached 73.9 billion US dollars, an increase of 8.8% over 2020. Companies such as Amazon, Google and Microsoft are developing these infrastructures to transfer data around the world.
Mandeep Singh, an intelligence analyst at Bloomberg, said that data center processors alone could generate $28 billion in revenue a year. He pointed out in his research report on Thursday: "the arm server market is one of the highlights of the chip industry. Re entering this market will expand Qualcomm's market participation."
For a long time, large cloud computing data centers have relied on Intel's processor technology to run their servers, but these companies have also begun to gradually accept ARM processors. Arm is a key partner of Qualcomm mobile processors.
Due to its low power consumption, ARM processor has occupied a dominant position in the smartphone market. Now, power consumption is also becoming an urgent problem in the data center industry. With the growth of the number of servers, servers consume more and more power, so the company hopes to obtain more energy-efficient chips.
Amazon designs its own chip based on arm to meet this demand. Amazon's graviton processors have been developed for several generations, and Amazon is also promoting these processors to customers. However, Amazon still uses chips from Intel, AMD and NVIDIA, and Qualcomm also sees opportunities to compete with these companies.
The last time Qualcomm tried to do this was in 2018, when Qualcomm launched a server chip centriq 2400 based on arm design and started OEM production through Samsung Electronics. Qualcomm said that this processor is superior to Intel Xeon processor in terms of energy efficiency and cost. At the public promotion of server chip products in November of that year, Microsoft and other potential customers spoke on the stage and expressed their interest in Qualcomm products.
However, less than a year later, Qualcomm's management decided to stop the project. Anand Chandrasekher, a former Intel executive who led this work, also left Qualcomm.
For Intel, Qualcomm's latest move will bring more fierce competition to the industry. After being robbed of market share by companies such as AMD and Amazon, Intel is also actively developing relevant technologies and manufacturing capabilities.
