According to Bloomberg News on August 18, a person familiar with the matter told Bloomberg that Qualcomm is considering launching a new chip to return to the server market to reduce its dependence on smartphones. Leifeng.com
Qualcomm is looking for customers for products from chip company Nuvia, which it acquired last year, the report said. And, as one of the biggest buyers of server chips, Amazon-owned cloud solutions provider AWS is already considering Qualcomm’s products.
Reuters, which reprinted the news, said Amazon had confirmed to them that it was considering a Qualcomm product, while Qualcomm declined to comment and directed Reuters to review a press release when Qualcomm completed its acquisition of Nuvia last March.
Affected by the news, Qualcomm’s stock price rose 2.9% on the day. Before that, Qualcomm shares had fallen 19% this year.
As the consumer electronics industry continues to decline since 2022, upstream chip manufacturers have also begun to “tighten their belts” to live. Especially in the second quarter, chip giants have handed over disappointing answers and lowered future expectations.
In July, Qualcomm forecast that fourth-quarter revenue would be lower than Wall Street had previously forecast due to a difficult economic situation and slowing smartphone demand.
Also in July, Intel also announced its second-quarter 2022 financial report, which refreshed Intel’s worst performance since entering the 21st century. In the second quarter of 2022, not only did Intel’s revenue drop by 22%, but the company as a whole turned from profit to loss. Intel lost $500 million in the quarter, which was Intel’s first quarterly loss in nearly three decades.
After the quarterly report, Intel also lowered its forecast for the next quarter.
In the past, smartphones and other consumer electronics were the absolute mainstay of Qualcomm’s business, with chips for smartphones accounting for almost half of Qualcomm’s revenue.
Today’s downturn in consumer electronics has made Qualcomm try to reduce the business’s dependence on chips in this field. Although Qualcomm’s efforts to expand its business finally failed four years ago, the current Qualcomm CEO Cristiano Amon is still trying to make Qualcomm’s business change. More widely, and get rid of Qualcomm’s over-reliance on mobile phone chip revenue.
In the high-end server market, the price of a single chip is as high as thousands of dollars, which is “fat” in the eyes of chip makers.
Intel has dominated the industry for years and has 99% of the market.
So Qualcomm entered the server chip market in 2017. This is the first time that the “kings” of chips from the x86 architecture and Arm architecture in the consumer electronics field have played against each other in this field.
In 2017, Qualcomm’s server chip division has been trying to introduce the Arm architecture into the server chip market to counter the giant Intel in this field. That year, Qualcomm launched the server chip “Centrq 2400” based on the Arm architecture and manufactured by Samsung.
Qualcomm said the chip was superior to Intel’s Xeon server chips at the time in terms of energy efficiency and cost control.
In November 2017, Qualcomm held a press conference for the server chip, and potential customers such as Microsoft also attended the Qualcomm platform. However, in the same month, under the influence of Broadcom’s hostile takeover, little has been heard about the progress of the chip.
After the acquisition was halted by then-President Trump on the grounds that it endangered national security, Qualcomm has been busy cutting costs to clean up the mess to appease investors. Qualcomm’s then-CEO Steve Mollenkov said on a conference call that Qualcomm would cut “non-core businesses” as a result.
Under the influence of this wind direction, in May 2018, it was reported by foreign media that Qualcomm was studying the closure or sale of the server chip division. This marked Qualcomm’s first foray into server chips that failed.
But even if it suffered a failure, Qualcomm has not let go, saying that it will not give up the server chip business.
This has paved the way for today’s “changes in the world” and Qualcomm’s “return” to the server track.
In recent years, the server chip market is slowly changing, and server chips based on Arm and RISC-V are challenging Intel’s absolute dominance in the server market.
As the leader of cloud computing in the United States, Amazon launched its first self-developed chip based on the Arm architecture, Graviton, in 2018, which provides lower-cost computing power, and the operating cost is 45% lower than that of Intel or AMD chips. In China, Alibaba has also launched the Etian 710 server chip based on the Arm architecture, claiming that its performance exceeds that of the industry by 20%, and the energy efficiency ratio is increased by 50%.
In addition, Ventana and other companies are still planning to use the RISC-V architecture to design server chips, which may become a force that cannot be ignored in the server chip track in the future.
This change was also reflected in Intel’s earnings report: In the second quarter of this year, Intel’s data center chip division revenue fell 16%.
In this case, Qualcomm’s return to the server market may bring new challenges to Intel’s “throne”.
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